Insurance Industry Changes To Prepare For: Update on Water 2014

By: Deborah Gibson, B.A., CIP

As the notable consequence of multiple claims from flood and ice storms in 2013, insurance companies are changing the way they underwrite and rate your property risks for 2014 on water damage. Not only for the peril of flood and sewer-back-up, water claims result from a variety of sources and causes.  From seepage and leekage through basement cracks, to windstorm, hail, damaged roofs,  sprinkler system malfunctions, watermain overflows and burst frozen pipes– water damage claims are now more common than fire.  You, the buyer, should be aware of what your policy wording states.

Got a new competitive quotation?  Check why your price is really different. The deductible on the front of the quotation may mask the small print at the end showing a much higher deductible for ALL WATER claims.  More importantly, the cause of the water damage and the number of water claims you have will influence whether you can get coverage for ANY price.

Here are the common industry practices seeping through renewals from commercial insurers:

1. Total exclusions. If you have had multiple water claims, insurers may decline the peril of water from all sources.

2. Limitations. You may be in a geographic area prone to problems with sewer back-up. Limitations could be placed on your risk unless you take decisive action to install a backwater valve.  Back-water valves must be installed in accordance with manufacturers instructions and meet provincial and municipal by-laws, regulations, ordinances, codes or laws relating to sewers.

3. Increased deductibles. If certain requirements are not met, deductibles can increase from the standard $2,500 to $10,000 for sewer back-up or septic systems.

4. Increased sewer back-up or water infiltration waiting periods.  Business can be interrupted by water loss and there are limitations to the length of time between a direct physical loss and when the liability of the insurer comes into affect.

We encourage you to call CCV Insurance Brokers and the My School team to understand your options. Major cities are also offering rebates for installation of back-water valves to assist the mediation.  We want you to be confident that a rainy day or burst pipe leaves no question on who will have to pay.

Download a printable version here