BC floods: Victim says insurance only covered $30K after house was destroyed

MERRITT, BC — A survivor of last year’s catastrophic British Columbia flooding is warning others to check her insurance policies after she said she received a payout of just $30,000 when her home, valued at $414,000, was destroyed.

Pam Velt, whose home collapsed into the Nicola River last November, said she and her husband, Paulus, believed they were fully insured.

“We thought we were covered,” he said. “I have finally realized that we have no home left. And everything we have worked hard for is gone.”

The Velts had just begun their retirement on the rural property along Highway 8 west of Merritt, BC, and planned to leave it to their son, who also lived with them. They are now housed in a 12-foot trailer with the support of the Canadian Red Cross.

Despite paying more for land-based flood insurance, which covers damage from heavy rains and overflowing rivers, Velt said they were surprised by the amount of the payment and dispute it.

A copy of the Velts’ insurance coverage shows that their primary policy includes a total of $674,050 in property coverage, including $313,500 for their home and other coverage for additional structures, personal property and loss of use. Under the additional and optional coverage, the amount of land flood insurance is $30,000.

His insurer, Wawanesa Mutual Insurance Company, said that in the interest of its policyholders’ privacy, it could not comment on the specifics of a claim or the details of a dispute.

There are several options open to policyholders who disagree with the company’s decisions, including contacting the General Insurance Ombudsman Service and the Canadian Consumer Finance Agency, he said.

Prior to 2015, the only financial compensation available for land-based flood damage to homes in Canada was through disaster financial assistance programs provided by the federal and provincial governments, said Brad Hartle, a spokesman for Wawanesa. The company is one of 30 companies in Canada that now offer some level of flood coverage.

“Some homes face a higher risk of land-based flooding than others and that is reflected in the coverage available and the price charged,” he said.

Rob de Pruis, national director of consumer and industry relations for the Insurance Bureau of Canada, said insurance costs related to extreme weather have skyrocketed in the past decade. The national average stands at $2.1 billion annually, up from $422 million between 1983 and 2008.

“The insurance industry has seen an increase in the frequency and severity of severe weather events, and we’ve been sounding the alarm for years,” he said.

The November floods were the costliest disaster in BC history, with insured costs estimated at $515 million as of January. That figure is likely to rise and does not include uninsured costs, the bureau says.

The best estimate based on anecdotal evidence is that about 30 percent of properties in high-impact areas had some level of groundwater flood coverage, de Pruis said, but there is no official count.

Some 800,000 properties in high-risk areas across Canada remain ineligible for coverage, it said.

Insurance Canada is working with the federal government to develop a flood map and flood plan to increase coverage eligibility for those currently uninsured, he said.

For now, it’s up to individual companies to determine how much coverage they will offer in risky areas like floodplains and along rivers.

Pricing is difficult because some risks are so high that the appropriate price of coverage would be unaffordable, de Pruis said.

“As the risk starts to go up, the cost goes up, and coverage limits can be lowered,” he said.

In a press release this week, the British Columbian government urged British Columbians to prepare for disasters by purchasing home insurance.

However, he notes that it can be difficult to get flood insurance.

“While residential flood insurance may be limited in higher-risk areas, insurance representatives can help determine if residential flood insurance or sewer coverage is available for your property,” the government says.

Months after the flood, Velt said she and her husband are still making mortgage payments on the house that is gone and also paying for insurance to protect themselves from liability if someone is injured on the property.

The last time Velt was in the house, he was trying to force the door open to rescue his pets. He’s been wearing rubber boots and donated hoodies, but with the seasons changing, Velt said he realizes he needs a whole new summer wardrobe.

“When you leave with what you’re wearing, you don’t have anything. It’s summer coming now, I tried to explain to the Red Cross that we don’t have shorts,” he said.

The BC government has said flood victims are eligible for up to $300,000 in disaster financial assistance, and Velt said he hopes it will come soon.

For now, she said she is grateful for the support from friends and family.

“We are in limbo.”

This report from The Canadian Press was first published on April 15, 2022.

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