Are your clients adding water endorsements to home policies?

An increasing number of your clients are expressing interest in water endorsements on home insurance policies, according to data from rate aggregator Rates.ca’s home insurance quoter.

The rate comparison website found 36% of all home insurance quotes on the tool added water endorsements in January 2024, a 39% year-over-year increase. It would appear brokers’ discussions with clients about adding water endorsements are paying off, as consumer interest has increased steadily throughout 2022 and 2023.

In particular, Rates.ca reports year-over-year increases in the total number of home insurance quotes with added water endorsements in July 2023 (20% year-over-year), August 2023 (29%), September 2023 (15%), October 23 (77%), November 2023 (21%) and December 2023 (39%).

“Over the past several years, extreme weather events across the country have become harder to ignore,” Daniel Ivans, a Rates.ca insurance expert and licensed insurance broker, says in a statement released Wednesday. “Consumers are becoming more aware of the risks involved, especially potential water damage, and are taking steps to protect themselves.”

In addition to water endorsements, Ivans adds, homeowners need to pay attention to deductibles and coverage amounts, and make sure they’re in line with both their financial situations and levels of risk associated with home location.

Which type of water endorsements are clients adding?

Rates.ca finds overland flooding and sewer backup the most common water endorsements added to quotes, comprising about 38% each of total quotes with added endorsements in January 2024. Ground water made up the remaining approximately 25% of total quotes with added water endorsements last month.

Related: Flood policy education: What brokers are up against

Educating the public on the importance of water endorsements might seem like an uphill battle for brokers. A survey commissioned by Rates.ca and BNN Bloomberg in September 2023 found half of Canadian homeowners have not purchased additional coverage for water damage, instead relying on a stand homeowner policy that does not cover risk of overland flood or water seepage into the home.

The survey of more than 1,500 Canadians found 32% of homeowners incorrectly believe their standard home insurance policy covers them against overland water damage and sewer backup. But 57% of those polled are aware optional water damage coverages must be purchased in addition to base coverage.

The lack of knowledge about what’s covered on a standard home policy was echoed in a March 2022 study from another rate aggregator, LowestRates.ca, which found 30% of 544 respondents were unaware that coverages like overland flood are add-ons to a standard home policy, with only 9% adding the type of coverage to their policies in 2021.

But as evidenced by the latest Rates.ca study, interest has picked up over the last couple of years. According to the September 2023 Leger study, 14% of all insured homeowners contacted their insurance provider in the previous months to review insurance coverages to ensure they were adequately covered, and 4% of those that did added endorsements to cover damage from extreme weather.

Another Leger survey commissioned by Rates.ca and BNN Bloomberg in June 2023 also showed two-thirds of all young homeowners in Canada considered weather-related climate risks when buying a home.

Feature image by iStock.com/shaunl