https://www.canadianunderwriter.ca/catastrophes/frustrated-brokers-ready-drop-carriers-flood-confusion-1004124298/
[The words 'climate change' do not appear in this piece, but that is
exactly what this is about. Note communities within a few kilometres of
me had 'once-in-more-than-100-years' flooding events, not once, but
twice, this year - spring and fall due to record rainfalls over periods
of days. Flooding consequences exacerbated by 'urban planning' which
moves rainwater from drop points (roofs, driveways, roads, yards) ever
faster to creeks, streams, rivers and standing bodies of water.]
Frustrated brokers ready to drop carriers over flood confusion
November 24, 2017
by Greg Meckbach, Associate Editor
Swirling in the eddies of confusion about overland coverage, frustrated
Canadian brokers are threatening to drop carriers and are worried about
errors and omission (E&O) claims related to overland flood insurance.
Canada-wide, there is a “host of wordings out there” for flood coverage,
Glenn McGillivray, managing director of the Institute for Catastrophic
Loss Reduction (ICLR), told Canadian Underwriter Friday.
“This causes and will continue to cause confusion, as premiums,
deductibles, caps/limits, exclusions and policy wordings are all over
the place,” McGillivray said. “I have heard of brokers threatening to
‘fire’ companies who don’t offer an overland product, because they don’t
want to have to explain that to insureds.”
Though sewer backup coverage has been available for years, coverage for
overland flood was generally not available to Canadian homeowners until
2015.
Now the Insurance Brokers Association of Nova Scotia is hearing “great
concern over the potential for E&O where [overland flood] is an optional
coverage,” IBANS president Gina McFetridge said Thursday in an interview.
“There is a high level of misunderstanding among general consumers over
what historically has been covered and what may or may not be covered
moving forward,” she said.
IBANS officials understand the insurance companies’ desires to
differentiate themselves through finding unique ways to offer this
product, said McFetridge, adding it is “wonderful” that coverage for
flood is now available.
But depending on the policy, there could be coverage for sewer backup,
overland water or ground water.
The Personal, for example, has one endorsement for “ground water seepage
and sewer back-up” and a separate endorsement covering “water that
reaches the premises and that originates from the rising or overflow of
a body of water or from a dam break.”
By contrast, RSA’s Waterproof coverage insures “against damage caused by
storm activity and flooding, eaves, downspouts, drains and sewer backup.”
“Overland essentially covers everything that is not sewer backup
(surcharge through a pipe) or seepage,” McGillivray said in an email.
“Overland flood comes when water flows over the surface of the earth,
and may include riverine flooding (i.e. fluvial), heavy rainfall-related
flooding (i.e. pluvial), burst municipal water mains etc.”
Some insurance companies are “tying” overland coverage with sewer
backup, McFetridge noted.
“Some are selling it separately, some are automatically adding it to the
policy, others are separating it out into three different coverages even.”
About 8% to 10% of Canadian homeowners are in areas where flood coverage
is not available or where the premium “would be outrageous,” suggested
Robert Harrison, chairman of the Insurance Brokers Association of Canada.
“Brokers need to understand what’s available in the marketplace,”
Harrison said. “They also need to understand what can be done
proactively” to reduce homeowners’ risk of suffering a water-related
loss, such as installing backwater valves or moving expensive consumer
electronics from the basement to an upper level, he added.
