March 19, 2014

By Brian Babcock

Massive winter snowfalls in Thunder Bay increase the risk of spring flooding. We hope for a smooth and gradual melt, but if the worst happens, are you prepared?

A few things to know about flooding and insurance:

  • Most property insurance does NOT cover flooding.
  • Each insurance policy is different and your rights are subject to the provisions of your particular policies.
  • Policy wordings vary as to how this risk is not covered, so IF flooding occurs, read your policy, talk to your broker or agent, or your lawyer.
  • Common wordings exclude damage due events such as to “seepage” or “groundwater” or “rising of the water table”. These terms do not always mean what you, or the insurance adjuster, might think they mean – if you are denied coverage, it is worth getting legal advice.
  • Sewer backup is covered in some, but not all, policies – again, wordings vary.
  • Regardless of coverage, contact your insurer as soon as possible – have them send an adjuster to document the loss. Failure to report your loss in a timely way may result in a denial of coverage.
  • Document the loss yourself – a picture is worth a thousand words.
  • Collect names, addresses and telephone numbers of witnesses, obtain repair estimates, keep a record of expenses (such as alternative housing, etc.) and locate original bills and receipts for lost or damaged items.
  • Minimize the damage.
  • Beware of the risk of mould.
  • Make sure you know where you stand on coverage before spending money to replace or repair damaged items.
  • If there is coverage, ask for an advance payment to cover expenses as you incur them.
  • Be aware of whatever you sign.
  • If the insurance company sends a contractor, they will likely ask you to sign a form – read it to see if it is simply authorizing the contractor to do work and bill the insurer, or whether you are promising to pay.
  • You do NOT have to use the insurer’s contractors, but if you do the work yourself, or hire your own contractors, you may have issues about how much the insurer will pay.
  • Even if your house is damaged and unlivable, you must still pay your mortgage, taxes and other expenses. Some lenders may negotiate a payment holiday in a crisis.
  • If coverage is denied, get the reasons in writing.
  • Before you settle with the insurance company, be aware of the full extent of your damage and the full value of your claim. You might want to get multiple estimates before settling if there is work not done or items not yet replaced.
  • If the insurer refuses to pay, seek legal advice promptly as there are time limits and rules regarding the proof of loss and going to court.

Our best advice though is to take preventative measures such as installing backflow protection; checking sump pumps; clearing eavestroughing and downspouts; moving snow away from your house – preferably to where run off will flow away from the foundation. An ounce of prevention is worth ten pounds of sandbags.

Insurance is a wonderful thing, but risk management is always your best investment.