Climate change is real and its costs to Canadian homeowners
Climate change is real and its costs to Canadian homeowners are increasing.
Due to the increase in the severity and intensity of extreme weather events over time, scientists point to global climate change resulting in more flooding and water damage to Canadian homes.
Thirty years ago, insured losses for extreme weather averaged around $400 million a year. Now that average is closer to $1 billion a year. (natural disaster) and the insurer's actuarial is expecting the loss to increase more yearly.
About Natural Disaster
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What Is Natural Disaster Insurance?
When a natural disaster strikes, it means an event that occurs naturally, such as a flood, earthquake, hurricane, forest fire that causes great damage or loss of life and properties. It is sometimes referred to as Disaster Insurance, Catastrophic Loss Insurance or catastrophe Risk Insurance. These terms are referred to as insurance coverage for natural disasters. The insurance provides an individual or a company with protection to remunerate expenses or financial losses incurred during the event. Extreme weather conditions cause most natural disasters.
Many people are confused about whether insurance companies cover disasters as there were common saying that it is an 'act of god.' In a disaster, property and business owners panicked, and many questions or concerns might arise, questioning when will the insurance relief be available to them.
Are these damage covered by insurance?
While some people assume that insurance providers do not cover these disasters, damages caused by a natural disaster can, in fact, be covered. This type's insurance policy includes coverage for floods, hurricanes, earthquakes, tsunamis, tornadoes, wildfires, blizzards, and snowstorms. Some unusual or severe weather is included in particular insurance policies like windstorms, ice and hailstorms, heavy rainfall, fire and smoke damage, lightning, and damage caused by dropping items.
Certain types of natural disasters are common in a specific place, so it can be easy to predict them depending on where you reside. For example, there's a huge possibility of flooding in coastal areas, wildfires in vast forest areas and woodland areas, earthquakes on fault lines. However, like most natural disasters, they are unforeseeable, making it tough to predict or include the right coverage in a policy of this kind.
What is covered by Natural Disaster Insurance?
Insurance provides compensation for losses and damage due to the result of a large-scale disaster. Some of the event including:
- animals stock lost
- Business or personal properties losses
- Movable properties losses or damage
- industrial risks
- personal injury and rehabilitation costs
- Interruption in business operations resulting in loss of income
- Replacement and repair for vehicles, equipment or property
The outcomes of extreme weather and unforeseen calamities on individuals and companies are vast. That means that if these natural disasters are not specifically stipulated in regular Home, Vehicle, Business or Travel Insurance policies, then it's essential to pay more than the usual attention when selecting and determining the appropriate general Disaster insurance policy that covers specific risks and possible damages.
How to Be Prepared For Natural Disaster?
The weather patterns are ever-changing, and severe weather is occurring more regularly in Canada. Be alert of what the government and the insurance industry are doing to lessen damages and losses, take steps to prevent damage and be prepared to manage a crisis when disaster strikes.
It is not a surprise that flooding will cause extensive property damage. Most of it results from torrential rains, and it can be extensive. Insurance policies may have coverage to help protect against sewer backup damage.
Another natural disaster is Wildfires, especially forest fires that are unpredictable and difficult to contain. Learn the steps of extinguishing fires at home and reduce your possible risk of a home fire.
Windstorms can cause disastrous effects and can be extremely hazardous. Be updated on what damages or losses your insurance company may cover and understand how to take precautionary measures against a windstorm.
Ice can also cause huge damages resulting from ice and hail storms. It was estimated to have caused more than $ 1 billion worth of damages since 2011. You can know more about to what extent of damages can be covered by insurance.
Earthquakes can have detrimental effects and can damage, both directly and indirectly, structures, roads, etc. The sad thing is they may not be covered by insurance. Damages and losses brought about by this type of natural disaster can also be lasting and disturbing.
Property Insurance for Natural Disaster
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Which Insurance Policy Has Natural Disaster Coverage?
Most of the Disaster Insurance can be purchase as a standalone or has been bundled as part of property insurance. Some policies that may already include part of disaster recovery including:
- Business Interruption as part of business insurance
- Home Insurance which covers property (i.e. Fire)
- Flood Insurance (as an endorsement on home or business)
- Sewer Back-Up (as an endorsement on home or business)
What Does Disaster Insurance Not Cover?
Some areas are undeniably disaster-prone. For example, people living in houses built in frequently flooded areas or high-risk locations may find it tougher to find insurance than individuals in other parts of the country, which are less prone to disasters. This is because repair and replacement costs for those areas will eventually outweigh the cost of insurance premiums paid for after being always beaten by those natural disasters. You may find insurance companies that would cover those situations. Still, you may face yet another obstacle, almost prohibitive insurance premium charges.
Homeowner policyholders should also need to review the kind of flood insurance included in their policies if any. Many home and property insurance packages cover risks from flooding, yet not really for 'overland flooding,' but for 'sewer backup.'
Do you know the difference between the two? Overland flooding has coverage on water damage caused by outside water leaking into the walls or basement, while sewer backup denotes damages from an internal overflowing sewage system. It's critical always to make a habit of checking the terms stipulated in an insurance package and understand the exact meaning of the wording since the authorities are becoming more resistant to compensate for flood damages as part of natural disasters. Misinterpreting something from your policy can be a costly thing.
Some situations like earth movements, earthquakes, sinkholes and landslides are very tricky for insurance claims. It is because regular home insurance policies do not include these types of conditions. Look for 'named perils' specifically worded in the policies. However, not all policies offer financial protection for the outcomes of the conditions mentioned above.
Disasters that are human-made, such as war or nuclear accidents, are standard exclusions to most insurance policies.
Who Should get Natural Disaster Insurance?
Anybody who owns their property or has an outstanding mortgage should get as much protection on their financial interest. As natural disasters vary from every region, it can be challenging to recommend anybody a standard coverage package that fits all. Should disaster strike, it could cause immense physical and financial damage to properties and anybody in the area.