Navigating the Water Words

The term “flood” is often used to describe an event where water enters property and causes damage. For insurance purposes, it is important that we wade through the “water words”.

Generally accepted industry terms:

Flood: Refers to coastal flooding of salt water, such as Tsunamis and tidal waves.

Overland Water: Fresh water from rivers, lakes or sudden accumulation from heavy rain or rapid snow melt.

Sewer Backup: The backing up or escape of water from a sewer system, septic or sump pump failure.

Basic Water: Escape of water from a domestic appliance or water container (water heater for example)

With ‘water’ now the leading cause of home insurance claims in Ontario, understanding water risk and the correlating coverage options, is an important part of a risk management program.

As is defined above, Flood is generally not insurable and the Basic Water coverage is included in all packaged home, condo and tenant policies. Sewer Backup coverage has been available and widely adopted in Ontario for many years. Whereas Overland Water is relatively new, and was not an available coverage option prior to 2015.

The coverage and cost of Overland Water is not a simple statement or premium equation that can be accurately condensed into a Medallion Minute article. Due to the complexity, it is important to speak with your licensed insurance representative.

To assist our Members insured with Aviva, here are some key points to note:

  • Insurance companies use risk modeling to predict the frequency and severity of water losses. There are currently 15 zones, with zone 1 representing the lowest risk and 15 being the highest
  • While Overland Water coverage is available to the vast majority, there are areas that have proven to be prone to water accumulation and the coverage is either limited ($25,000 limit for example) or not available
  • Sewer Backup coverage must be in place or purchased alongside Overland Water
  • Predictive modeling is also used for Sewer Backup and has separate zoning. For example, your home might be located in zone 10 for Sewer Backup and zone 7 for Overland Water
  • Overland Water has its own deductible, separate from the policy deductible. The Disappearing Deductible endorsement does not apply to Overland Water losses
  • Pricing of Overland Water varies between zones and surcharges apply to homes with reverse slopping driveways
  • Overland Water coverage can be added to your policy mid-term. Meaning, you do not have to wait until your renewal date to purchase the additional protection. When adding the coverage, a completed questionnaire may be required

The average water damage claim cost is in the area of $50,000 to $80,000 and predictive modeling clearly shows that we are likely to experience an increasing number of water events.

Unlike the basic coverage included in your package, Sewer Backup and Overland Water are optional coverages, meaning you need to opt-in and purchase it. If coverage is not available through our primary group carrier, as an independent insurance brokerage, we can look to secure the coverage through other markets.

Wishing you health & happiness (and a warm, dry home!) this holiday season.

Sarah Heiser, CIP, CRM

Registered Insurance Broker

Medallion Group Insurance

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