Do you have coverage for natural disasters?
Torrential rains, tornadoes, windstorms, hailstorms: sooner or later, everyone experiences one or more of these. Contrary to what many people think, most of these events, commonly known as "acts of God”, can be insured.
The climate is changing. Insurance companies are seeing the effects of climate change. In 2016, they paid out nearly $5 billion for claims related to extreme weather, including the wildfires in Alberta1.
Most weather events are covered
The majority of severe weather events are covered under home insurance policies, and some of the others can be added by endorsement. Automobile insurance policies also cover most natural disasters as long as the insured selects the physical damage option (Section B).
- Insured Perils
Basic home insurance policies have coverage for loss or damage caused by lightning, hail, wind and forest fires. For example, if a windstorm damages the exterior of your residence, your insurance will pay for the damage, up to the amount of your policy limit.
- Perils covered by endorsement
Certain other natural disasters can be covered by adding endorsements to the insurance policy. These include earthquakes and floods.
- Perils not covered
There is no protection for damage resulting from a landslide.
Earthquake: two types of damage
In Quebec, the risk of a major earthquake occurring at some point is very real2. Insurance policies describe two types of damage related to earthquakes:
- Damage resulting from fire, explosion or smoke after an earthquake. Many customers have coverage for this damage included in their home insurance policy2. You can check with your broker to see if you have this protection.
- Damage resulting directly from the earthquake. Few people have coverage for this2, but it can be added by an endorsement to the policy.
Floods: they’re happening more often
Water damage is now the number one cause of claims in home insurance, accounting for about half of all indemnities paid out.3 The main reason: for years now, heavy rainstorms, floods and other extreme weather events have been growing more frequent and causing more damage4. Insurers have responded to climate change by offering new types of protection to meet customers' needs. Now, damage caused by rising water and the overflowing of lakes or rivers can now be covered by endorsements added to the policy, if you are eligible4.
Example: An ice jam raises the level of the river which your home overlooks. The water rises onto your land and floods your basement. The damage will be covered if you have purchased the endorsement for Water Damage – Ground Water, Sewers, and Overflow of Body of Water3.
A constant concern
Natural disasters have become a major concern for insurance companies. They conduct studies to determine the probability of occurrence and the average cost of the damage they will cause. Risk sharing based on these probabilities is a key concept that is the foundation of both your home insurance and your car insurance5.
Ask your broker
To learn more about this topic, or if you have any questions, call your broker–your best source for information and advice.