"Water damage" is not one thing on a home insurance policy. The cause of the water matters a great deal, which is why two homeowners with similar damage can get very different claim outcomes.
Sewer backup
This is water that comes up through drains, toilets or sump systems when a sewer or drain line backs up. The Insurance Bureau of Canada (IBC) says basement damage from sewer backup is only covered if you have bought specific, optional sewer backup coverage. It is commonly sold as an add-on, called an endorsement.
Overland flood
Overland flood is water that comes in from outside when bodies of water such as rivers overflow onto dry land, or when heavy rain runs across the ground into a building. IBC describes this as optional coverage that is widely available in Ontario. It often has coverage limits, and it may be unavailable if you live in a known flood plain or a high-risk area.
Burst pipes and sudden leaks
Water from a sudden failure inside the house, such as a burst pipe or a failed appliance hose, is generally treated as a different category from the two above, and is typically covered under a standard policy. Damage that builds up slowly over time, such as a long-term leak, is often excluded.
What is generally not covered
IBC notes that home and business policies generally do not cover coastal flooding or storm surge, and that groundwater and seepage are typically not standard coverages offered on all home policies, although they may be available as optional endorsements.
What to check on your policy
- Whether sewer backup is included, and the limit and the deductible.
- Whether overland flood is included, and the limit and the deductible.
- Whether the limits are per claim or per year.
- Whether an exclusion applies to your area or to a finished basement.
Coverage varies by insurer and policy, so reading your own wording matters more than any general summary.
Questions to ask
- Am I covered for sewer backup, and for how much?
- Can overland flood be added at my address?
- Does the deductible differ for water claims?