Canadian Underwriter

Number and cost of residential water damage claims on steady rise, Aviva Canada says

March 23, 2015   by Canadian Underwriter

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With the late winter thaw happening around the country, to be followed by the spring and summer rains, Aviva Canada Inc. is encouraging Canadians to take steps to protect their property from water damage.

Road washed out by the swollen Elbow River in Bragg Creek after the flood in Calgary and surroundings in June 2013. The local landmark Bragg Creek Trading Post has been devastated. “2013 was our worst year for water damage in part due to flooding in Alberta and Toronto,” said Sharon Ludlow, president of Aviva Insurance Company of Canada, in a press release on Friday. “But it is important to note that water damage is steadily increasing in terms of the number and cost of claims, and that homeowners and tenants can take steps to protect themselves from loss.”

In 2014, water damage claims accounted for 44% of dollars paid out on all Aviva Canada property damage claims, compared with 39% in 2004. The average cost per residential water damage claim has increased significantly – going from $11,709 in 2004 to $16,070 in 2014, a 37% increase. [Click image below to enlarge]

Comparison of average cost of water damage claims 2004 vs. 2014

Aviva Canada paid out $180 million in water damage claims in 2014, a 189% increase versus 2004 and a 57% increase versus 2012, the press release noted. “The reasons for the upward trend are rather simple,” Ludlow said. “The increasing investment Canadians are putting into their basements, combined with more frequent severe weather events and an aging sewer system that is unable to deal with large amounts of water within a short time period, results in a lot of homes experiencing damage.”

It’s not just Aviva Canada data that highlights the rise in water damage issue, weather data shows our country is getting wetter, the press release said. Average yearly rainfall in Canada has increased by 12% in the past 60 years, with 20 more days of rain a year than the 1950s.

Related: Aviva to launch overland flood endorsement for Ontario, Alberta home policyholders in May

And catastrophes like overland flooding are on the increase. According to Environment Canada, severe weather events that used to happen every 40 years can now be expected to happen every six years.

In February, Aviva Canada announced that it will offer overland water protection for residential property owners and tenants across Canada, coverage which has generally not been available to Canadian homeowners. Available as an endorsement to personal property insurance policies that have sewer back-up protection in place – Aviva Canada’s overland water damage coverage will be launched in Alberta and Ontario in May, and then rolled out to other provinces throughout 2015.

Associate Editor’s Note: In the 2012 report Telling the Weather Story, commissioned to the Institute for Catastrophic Loss Reduction by the Insurance Bureau of Canada, Professor Gordon McBean writes: “Weather events that used to happen once every 40 years are now happening once every six years in some regions in the country.” A footnote cites “Environment Canada: Intensity-Duration-Frequency Tables and Graphs.” However, a spokesperson for Environment and Climate Change Canada told Canadian Underwriter that ECCC’s studies “have not shown evidence to support” this statement. 

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