Coverage policies bound to change

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Disastrous flooding is the big story in Alberta these days. The rest of the country is certainly sympathetic, but we can bet the long-term outcome of this and similar catastrophes will directly affect us.

How the insurance industry fits into the overall picture of extreme weather events is expected to become a hot topic.

Generally insurance policies don’t cover overland flood damage, the kind we’re seeing on the news in Calgary, where rivers overflow their banks and inundate homes. They do cover such misfortunes as sewer backup, which also can be a result of weather-related flooding.

But an environmental professor at the University of Waterloo, Blair Feltmate, who is also chair of the Climate Change Adaptability Project, said in an article reported by The Canadian Press he believes the industry will succumb to pressure to extend coverage to include damage caused by overland flooding.

He also said extreme weather events have become so common that insurers are losing money on water damage insurance.

It’s not hard to figure that such sapping of profitability won’t continue for long.

Feltmate also predicts that, should the insurance industry be pressured to cover overland flood damage, the companies will be quick to refuse applicants in high-risk areas. There again, considering the increase in extreme weather we’re seeing, and the severe, widespread damage as a result, the category of “high risk” will certainly see wide application by the industry. Anything less would result in much higher premiums in general.

Doubtless, some will accuse the insurance companies of cherry picking in accepting what they consider reasonable risk and rejecting others. But such tough criteria will be inevitable as these storm stories show up more often in the news.

For existing infrastructure, homes and other development, options are limited. But what we’re seeing today should have much bearing on where and how well people build in the future.

Organizations: University of Waterloo, Canadian Press

Geographic location: Alberta, Calgary

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