Private or Public Insurance: Effectively Assisting Your Client After a Flood
“Water is the new fire,” announced Mathieu Boudreault, professor of actuarial sciences and researcher in the mathematics department of the Université du Québec à Montréal, during the closing speech of the Journée de l’assurance de dommages 2020 [2020 Damage Insurance Day Conference]. Professor Boudreault explained that storms and floods account for 79% of natural disasters. Indeed, the recurrence and increasing seriousness of such events are undeniable, as are the ever-higher costs of damages incurred. According to the Insurance Bureau of Canada (IBC), on average, these costs totaled $1.8 billion per year in Canada between 2009 and 2017.
Every year, spring thaw is a cause of concern for many Quebeckers, especially since the disastrous flooding of 2017 and 2019. In fact, the IBC estimates that 20% of the population is threatened by flooding—in other words, some 340,000 properties, not including condominiums and multi-unit dwellings.
While claims for such recurring natural disasters were previously entirely paid for by the government, since 2017, many insurers now offer this coverage in their home insurance contracts, most often in the form of an endorsement.
Since private and public compensation exist side by side, claims adjusters must clearly understand all the options available to claimants in order to fully explain their choices to them.
It is also advantageous for damage insurance agents and brokers to familiarize themselves with these concepts in order to properly advise their clients and make sure that clients understand the coverage and exclusions in their contracts.
Private Insurance and the Government’s Programme
For a number of years, the IBC has been educating governmental bodies and various organizations to “reduce the properties and infrastructure vulnerable to flooding, and thus create greater community resilience.” The IBC offers a number of tools including a webpage to assist consumers and the industry in understanding coverage offered in Quebec.
Did you know that claimants who suffer flood damage will find themselves in one of three situations?
If the claimant’s home insurance contract does not include coverage for flooding, you must direct the claimant to the programme of the ministère de la Sécurité publique (MSP) [Ministry of Public Safety].
- If the claimant’s insurance contract includes the required coverage, you may begin adjusting the claim.
- If the claimant’s insurance contract includes the required coverage, but the amount of insurance is insufficient to cover the damages incurred, you may also suggest that the claimant apply to the government programme for compensation.
Line Crevier, supervisor of technical affairs and the Insurance Information Centre at the IBC, confirms this advice: “When the claimant’s flood insurance does not cover all the damages suffered, the insured may also file a request for financial assistance with the ministère de la Sécurité publique.“
Although claims adjusters are responsible for the claims adjustment process vis-à-vis the insurer, they cannot represent their clients before the MSP. That being said, you can provide your client with information on the government programme, such as the fact that he can only make an application for essential property, and only for a limited amount. You must also follow up with your client to verify which property the MSP will indemnify and that which the insurer will indemnify or replace; property must be covered by one or the other, not both.
Information to Give Your Clients Regarding the Government Programme
The claimant must first verify on the MSP’s website whether he is eligible for the government programme, based on the date of the loss and his municipality of residence. He must also review the programme to find out which essential property is covered and for how much.
For example, you must explain to your client that under this government programme, he will receive a maximum of $475 for a mattress and box spring. “The insured needs to understand that if he chooses government assistance to cover his property, he cannot also receive compensation from his insurer for the same property,” explains Ms. Crevier. This means that if your client has a mattress worth $1,000, he cannot claim $475 from the MSP programme and $525 from the insurer; he must choose between claiming $475 from the government or $1,000 from his insurer.
It is also important to inform the claimant that certain types of property are not covered by the government, such as sports equipment, decorative items or home theatres; the client should make a claim for compensation to the insurer for such items.
On the other hand, other expenses are eligible under the government programme; expenses include implementing temporary preventive measures, temporary food and housing costs, moving and storage costs, and emergency work. “Insureds who have a flood endorsement are entitled to additional living expenses for a 14-day period following an evacuation order,” adds Ms. Crevier. “If the dwelling is damaged, this period could be extended to allow for necessary repairs.” Since insurers do not all use and apply endorsements in the same way, make sure to properly explain the coverage provided for in the contract to your client.
Finally, when a vehicle is flooded, the Société de l’assurance automobile du Québec usually considers it a write-off and it cannot be put back on the road. The ChAD explains your obligations under these circumstances in an article entitled “VGA : rôle de l’expert” [Seriously Damaged Vehicles: The Role of the Adjuster, article in French only].
Resources for your clients
The IBC has three tools to assist claimants:
- Spring Floods: What You Need to Know About Insurance
- 9 questions about flood insurance
- Floods: Filing Your Claim
- Assistance financière aux sinistrés : Programme général d’indemnisation et d’aide financière pour les propriétaires d’une résidence principale et les locataires [in French only]
The contents of this article are for information purposes only and do not replace decisions made by the MSP. Given the current extraordinary circumstances related to the COVID-19 pandemic, the claims adjustment process that claims adjusters mandated by an insurer and professionals mandated by the MSP must follow may have to be modified to comply with required social distancing measures.
FOR CLAIMS ADJUSTERS
Private and Public Compensation for Flooding
Three claimant situations
1. If the claimant’s home insurance contract does not include coverage for flooding, you must direct him or her to the programme of the ministère de la Sécurité publique (MSP). [Ministry of Public Safety, site in French only].
2.If the claimant’s insurance contract includes the required coverage, you may begin adjusting the claim.
3.If the claimant’s insurance contract includes the required coverage, but the amount of insurance is insufficient to cover the damages incurred, you may also suggest that the claimant apply to the government programme for compensation.
Private and Public Compensation: Pertinent Information for Your Client
- Verify online [in French only] whether the insured is eligible, based on the date of the loss and his or her municipality of residence.
- Review the MSP’s programme to obtain information including the types of essential property covered, what is not covered, other allowable expenses and amounts allocated.
- Identify which property the MSP will indemnify, and that which the insurer will indemnify; the same property cannot be covered by both.
The Claims Adjuster’s Role
- Provide a detailed explanation of the coverage included in the claimant’s contract.
- If coverage is insufficient for all the damage incurred, inform the claimant of the government programme and the steps he or she must take. You cannot intervene on the client’s behalf with the MSP.
- Follow up in order to find out which property the MSP will indemnify, and which property will be indemnified by the insurer.
- Close the claims adjustment process with the insurer.
Read the article entitled “Private or Public Insurance: Effectively Assisting Your Client After a Flood” and the Insurance Bureau of Canada web page for further details.
 INSURANCE BUREAU OFCANADA, Flooding.