Real estate professionals understand insurance risks related to fire, such as knob and tube wiring and insulbrick siding. In the coming years our industry will be dealing with flood and sewage backup risk and insurability as a course of business.
You don’t have to be a climatologist, lawyer or insurance broker to understand there is increased risk for real estate professionals and homeowners in the face of changing and more severe weather patterns. Insurers warn that storm water related property damage is quickly becoming the most prevalent insurance risks for homeowners. Basement flooding is one of the most common weather-related property damage claims.
What can you do to protect clients from liability? It is important to know that every region of Canada has different climate and weather risks. Municipal governments across Canada are investigating how to reduce risk to homeowners. As an example, in Toronto, 42 neighbourhoods have been identified as being “at risk” of basement flooding. Municipalities and insurers are addressing basement flooding aggressively, with reduced coverage, constrained coverage parameters and risk-reduction strategies such as back-flow prevention valves.
“The insurance industry sees increasingly frequent natural disasters. In financial terms, the cost of damage from natural disasters has doubled every five to seven years since the 1960s. In human terms, more families are suffering unnecessary losses,” says Kathy Bardswick, president and CEO of The Co-operators and chairperson of the Institute for Catastrophic Loss Reduction. “We feel a responsibility to respond to the realities of today’s weather by promoting flood protection to homeowners in Canada.”
Some of the issues:
Homes built in flood-prone areas
When Hurricane Hazel hit Ontario half a century ago, municipal planners created development criteria that seeks to avoid building in areas that can put people and property at risk. But there are always exceptions – neighbourhoods that were built prior to Hazel and homes built in flood-prone areas despite the risk.
Homes connected to sewer infrastructure that is prone to overflow and backflow
The intensity of storm systems is increasing and this means sewer infrastructure has greater demand than ever before. There are several contributing factors related to storm water and sewage backup. Some situations that occur in flood-prone areas include: 1) the diameter of the sewer pipe is not sufficient to hold all of the water flow during a heavy storm event; 2) the gradient of the sewer pipe is not steep enough to allow water flow at the same rate as the rain; and 3) heavily paved areas do not allow water to absorb into the ground, forcing more water into sewers.
Storms are bigger and more frequent
It seems no matter what part of Canada you live in, unusual weather patterns are threatening property everywhere. From ice storms in Toronto to floods in Calgary, we have seen an unprecedented level of destructive weather in recent years and it appears that this is just the beginning.
Resources for homeowners and advice for real estate professionals
It will be increasingly important for real estate professionals to be aware of flood-prone neighbourhoods and areas that are prone to sewage backup. Practitioners with neighbourhood experience will already be aware of areas at risk within their marketplace.
Municipalities and conservation authorities have a wealth of resources about what happens to surface water within a watershed and an understanding of where the storm water systems are subject to overflow and back flow. This information is important and valuable to home buyers and demonstrates caring and fiduciary professional expertise. Most of these kinds of resources are available through municipal governments.
Here are some links to get you started:
- Information on the Water Canada Municipal Risk Assessment Tool
- Toronto basement flooding resources
- Calgary flooding resources
- Winnipeg flooding resources
Chris Chopik is an influential housing industry innovator and a respected authority working at the intersection of housing, energy, resiliency and natural hazards. Chopik’s work includes an extensive exploration of the future of “Property Value in an Era of Climate Change” (2019) where he examines the financial impact of natural hazards on property values across North America. He holds a Master of Design, Strategic Foresight and Innovation from OCAD University.
