How new overland flood policies affect disaster assistance eligibility

Given recent flooding in Grand Forks and other areas of B.C., questions remain about the interplay between overland flood policies and how Disaster Financial Assistance (DFA) in B.C. factors into the response.

Various insurance coverages for overland flood are new, and do raise some questions about whether B.C. residents are eligible to apply to the government for financial assistance. According to an email from Emergency Management BC (EMBC), “if a flooding disaster occurs and DFA is authorized for a disaster event, an applicant who could reasonably and readily have purchased overland flood insurance would NOT be eligible for DFA.”

Resident Kyle Piper carries his bike from his house through the floodwaters in Grand Forks, B.C., on Thursday, May 17, 2018. THE CANADIAN PRESS/Jonathan Hayward

What does it mean for insurance to be “readily available?”

For EMBC, it means a person could obtain overland flood insurance from a local agent or broker, but “reasonably available” should not be confused with affordable. “EMBC does not consider affordability when determining if insurance was reasonably and readily available,” the ministry said. “What is important is that the price of the insurance was reasonable considering the risk.”

Based on their experience to date, EMBC says that “insurance companies do not offer flood insurance in high-risk locations because the premiums would be prohibitively expensive. Under EMBC’s existing criteria, someone in a high-risk area who could not get flood coverage could be eligible for DFA, provided they met the other eligibility criteria.”

EMBC consults with the Insurance Bureau of Canada (IBC) to determine if flood insurance is readily available in an area for which DFA has been authorized. “To date, flood insurance has been available in every community except for specific high-risk areas,” the provincial ministry reported.

When EMBC receives a DFA claim, they consult IBC and individual insurers or brokers post-event to see whether flood insurance was available or offered to that property owner at the time of policy purchase, says IBC’s vice president for the Pacific region, Aaron Sutherland. EMBC then uses that information to determine DFA applicability.

If there are policy limits, an applicant may be eligible for some DFA. The provincial ministry told Canadian Underwriter that in Grand Forks, for example, some flood insurance policies had a $30,000 cap. “In this case, our evaluators will determine the DFA eligible losses and the amount of compensation for these losses; we will then deduct the insurable amount and calculate the DFA payment on the difference.”

EMBC said that it is closely monitoring the availability of overland flood insurance in B.C. Over the next several years, as additional insurance options roll out, EMBC will apply discretion in how it determines eligibility. For example, a homeowner or tenant would not be expected to amend their existing policy as soon as overland flood insurance becomes available. But DFA may be denied if overland flood insurance was available on renewal and somebody chose not to purchase it.

“At this time, EMBC also does not expect a person to change insurance companies solely to obtain flood coverage,” the ministry said, adding that it will “continue to assess each individual DFA applicant by applying its existing legislative criteria in a fair and consistent way.”