Flooding: Choosing the right protection

4 minutes

Given the increasing number of severe weather events, is it possible to properly protect your business from flood damage?

How does your insurance policy protect you against this natural phenomenon?

In the wake of Hurricane Debby

Described as a destructive tropical cyclone, Hurricane Debby caused $2.5 billion in insured losses in Quebec alone. This makes it the most expensive weather event in Quebec's history, surpassing the 1998 ice storm.

Where is the water coming from?

First of all, we need to distinguish between water damage and flooding.

Although water damage is typically the result of broken water valves or pipes, it can also be the result of:

  • Water seepage through your building's roof, doors, windows or foundation
  • Sewer backup
  • Appliances such as water heaters and dishwashers
  • Sanitary equipment
  • etc.

Flooding, on the other hand, refers to an exceptional flow of water:

  • Spring thaw overrun
  • Torrential downpours
  • Dike collapse

What does your contract cover?

The basic contract covers your company's property and civil liability as well as business interruption.

Extended coverage covers damage caused by unexpected incidents inside your building and many other events (excluding natural water damage).

However, water seepage through the roof is a little trickier—sometimes it's covered and sometimes it's not. The easiest way to find out is to talk to your insurer.

Extras for even more protection

Whether damage is caused by sewer backflow or a flood, the important thing is to minimize losses.

For additional protection, consider adding specific clauses (also known as endorsements) for:

  • Sewer backflow
  • Flooding

 

Backflow protection

What exactly does it cover? All types of damage resulting from backflow inside your building:

  • Sewer
  • Sump pump
  • Septic tank
  • Drain

 

Flood protection

This coverage protects against damage caused by:

  • Groundwater, such as heavy rainfall
  • Water overflow (natural or artificial) such as waves, tides, tidal waves and tsunamis

Please note that damage caused by the following events is not covered:

  • Backflow from a sump pump, septic tank or drain inside the building
  • Groundwater seepage
  • A leak in the water main

The deductible is quite high for this coverage and varies from insurer to insurer. They will set the amount according to the value of your building and its contents.

Nature running wild

In terms of claims, insurers consider all losses having the same origin and occurring within 1 week as a single loss. This means your company has to pay the deductible only once.

What are your company's needs?

Your company has unique needs. To make sure it is protected, ask your insurer the following questions:

  • Am I covered in the event of flooding or sewer backflow?
  • Are there any endorsements I should consider adding?
  • Are my inventory, equipment and building sufficiently protected?
  • What happens if my company's activities are halted due to flooding?

Take the time to evaluate the potential costs of a claim in relation to the price of additional coverage. This will help you better protect your business and avoid unpleasant surprises.

How can you protect your business?

Before covering your business against flooding or sewer backflow, each insurer will assess the risk of such incidents occurring based on their own criteria:

  • Your company's claims history
  • How close your building is to a flood zone
  • The quality of your city's water supply network
  • The type of foundation
  • The presence of a valve
  • etc.

The insurer will offer coverage tailored to your company’s needs.

How to prevent water damage?

Water damage is one of the main causes of claims, yet a staggering 93% are avoidable.

Here are a few practical tips to help you mitigate the risks.

What’s the effect of climate change?

Is your business at greater risk of flooding as a result of climate change?

In Canada, severe weather events, once described as rare, are occurring with increasing frequency.

Climate Whiplash: A new phenomenon

Have you heard of climate whiplash? It refers to extreme swings between opposing weather conditions. For example, torrential rain followed by arid conditions in the span of a few days.

Another example? After two years of abundant rainfall and vegetation growth, the extremely dry weather in 2025 caused the great Los Angeles fire.

The intensity and cost of severe weather events are also increasing. In Canada, 2020, 2021, 2022 and 2023 all rank in the 10 most costly years for natural disasters. The only exceptions are the following events:

  • 2016 Fort McMurray fires
  • 2013 floods in Calgary and Toronto
  • 1998 Quebec ice storm

It's hard not to observe a trend. The impact of climate change on your business is real.

Act now

Protecting your company's future means taking action today. Make an appointment to assess your coverage with your insurer.