Homeowners dealing with insurance hurdles

By Jaymie White

Local Journalism Initiative Reporter

– with files from Rosalyn Roy

PORT AUX BASQUES — The stress of losing your home and a lifetime worth of memories is unfathomable enough, but that stress is compounded once insurance companies notify policy holders that they aren’t covered for the losses. This is the current reality for many families along the Southwest Coast who were most impacted by Hurricane Fiona.

Velda Tapp, one such resident whose home was damaged by the hurricane and is now slated for demolition, said she had difficulties getting the insurance company just to come and do the assessment on her home.

"I contacted the insurance to get them to come out, and then I got a phone call saying the assessment man was down there and I was at work, so I got my client together and went down on the street and nobody showed up. Then another man called me and said he would be there on Saturday at 3:00. I got ready and went down there on Saturday at 3:00, nobody showed up. So then I contacted them again and they just keep putting it off," explained Tapp. "I was told I couldn't remove anything at all from my house, so the house is down there right now. On the back it has water damage and probably mould set in now."

Many homeowners are finding out that, because the bulk of the damages were a result of a storm surge, their insurance company will not pay for repair or replacement. This is a blow to families who have paid for insurance for years, thinking that they were paying to remain secure in times of uncertainty, only to find that isn't the case.

Some families quickly received letters from insurance providers stating that the company reserves the right to close their file without compensation, whether investigations into their claim have been completed or not. Tapp said she is being told she will not have coverage from her private insurance and her provider even went so far as to actually fill out her government application to avail of funding set up for those who had claims denied.

"My private insurance set me back a 36 page letter and I can't believe they filled out my application to the government. They actually have it filled out telling what company I'm with, what my policy number is, what my coverage was, and I thought man, that's pretty gutsy, to just turn me away and pass me right over to them with everything filled out. It's all computerized, checked off and everything," said Tapp.

Amanda Dean, Vice-President, Atlantic, with the Insurance Bureau of Canada (IBC), said it’s important to pick up the phone and have a conversation with your insurance company or your insurance representative, to better understand what letters like this actually mean.

Dean explained that the legal wording present in a lot of these letters doesn’t accurately represent how the homeowners are feeling, and the conversations are important to establish that understanding.

“Insurance companies are a legal contract between the policy holder and the insurance company, so those contracts sometimes require letters that are worded in such a way that are from a legal manner,” said Dean. “What I do know is that every insurer that’s writing policies, every broker and every agent, completely empathize with what has happened to anybody in the region who has been impacted by Fiona – especially those in Port aux Basques because that’s where it was particularly shocking.”

Many of the claims being denied are because of the storm surge damage to the homes, and Dean explains storm surges are uninsurable in Canada currently.

“In this particular storm, storm surge was a big factor in a lot of the destruction that we’re seeing in homes throughout Port aux Basques - especially in PEI as well as parts of Cape Breton. Storm surge was a big piece of what Fiona brought when she came up on shore and that’s primarily why,” said Dean. “Storm surge is largely uninsurable in Canada. Years ago, insurers started down the path of looking at extended water coverage or flood coverage, and they started with flood plain insurance and the pooling of water - freshwater flooding if you will. So, riverbanks flooding, pooling of water after heavy rain, because that is something that happens across the country, no matter where you live. So insurers started there. Before 2015, you could not buy, in Canada, flood insurance coverage. It just wasn’t available because the risk models just didn’t exist. Now, storm surge is the next thing that we need to be talking about and looking at, especially now when we’ve seen the destruction that it can bring and the upending of people’s lives.”

An article by Lyle Adriano published in the Oct. 19, 2022 edition of Insurance Business Canada (insurancebusinessmag.com) noted that storm surge insurance is currently available in Canada only through The Co-operators, with about 60 per cent of their Atlantic Canadian customers opting to buy the coverage. But that is not who Tapp bought her coverage from, and even though she purchased more protection, she is not covered for the damage done by post-tropical depression Fiona.

"I bought every water insurance there was because I was close to the water. Overland, water coming up from the ground, backup sewer, I had that, and I had another package that I paid $80 for that was a stress-free package, I guess, so any claims I made, the first one was forgivable," explained Tapp. "So I paid about $150 extra since last year for that."

Tapp will be leaving her current insurance provider once everything gets settled.

"I won't be staying with them. To be six and seven weeks, stressed out to the maximum, there was no need of it. Most people had their letter within the next day or so emailed to them, but I'm not the only one."

Having more providers offer storm surge coverage may help prevent another insurance headache for homeowners near the water, but other than The Co-operators it simply isn't available yet.

“One of the things that has been happening over the past number of years is discussion about what a national flood program would look like in Canada and those discussions have been, and will be including, storm surge, because those discussions are focused on those properties that are at the highest risk in Canada,” explained Dean. “So that conversation has been led by Public Safety Canada and the Insurance Bureau of Canada on behalf of our member companies. We’ve been at the table and bringing information back to insurance companies as well to ensure a two-way conversation and that we’re ensuring we’re providing as much information about the insurance process as currently exists.”

Dean said the most important thing is that there is a representative from each province at that table, and the IBC will talk with each representative in the Atlantic Region, asking if there’s anything they can do to amplify their voice after this event.

“There has been a lot of work done on storm surge. One of the challenges with creating accurate risk models for storm surge is the impacts of climate change. Quite frankly, what that’s doing to sea level rise and what that’s doing to coastal erosion because, when either of those things change, it impacts where the damage could be,” said Dean.

Fiona is not the first time waterfront homes have been damaged in Port aux Basques by storm surge. There were homes lost back in 1976, and homeowners need more options to prepare for future storms.

“Particularly with this event, we saw sea water coming inland a lot further than it, perhaps, has ever come in, so it’s one of those things where a lot of work has to be done to accurately come up with those risk models,” explains Dean. “The other piece of it is there’s no point of creating something that is not going to be sustainable, because that’s not going to help people into the future if it’s only able to respond to one event and then it’s not able to be funded. We’re looking to work with government in order to make something that’s sustainable and something that responds to the needs of those in the high-risk areas.”

Tapp said that after her experience with her insurance carrier in the wake of Fiona, she will not be purchasing storm surge protection if and when it becomes available.

"My insurance will be minimum. Anything that I buy will be minimum and only if I carry a mortgage will I bother with it. I think I would rather have a safety deposit box and put my payment in every month and gather it up for the year. I think if shingles blew off or something, I could manage to put it on myself," said Tapp. "I've done a lot of reading on the insurance companies. A lady mentioned to me at the library about what happened in Manitoba when all this flooding went on, and all the insurance did the exact same thing with the flooding out there as they are doing here with the storm surge. They made excuses. They (Manitoba homeowners) went private. They got a private insurance, something like a co-op. So they pay into the insurance and it goes to the government, and at the end of the year you get more money back."

Tapp would like to see something similar put in place in this province.

"We are in Newfoundland and we are surrounded by salt water, so why would we pay for an insurance that we don't qualify for? We need a salt water insurance, private company, and I think the government, who is looking after us now, should be the one we pay our money back to."

Some who lost homes are still paying insurance premiums for coverage on homes that no longer exist, and Tapp doesn't believe that should be happening. One of her acquaintances was paying $113 every two weeks for her destroyed home, and ideally Tapp thinks people who continue to pay premiums on their homes should be reimbursed fully for those payments.

"What kind of people take $113, that's $226 a month, from someone who doesn't even have a fork or a knife? That's pretty greedy. We should be reimbursed for what we paid."

Dean said there other reasons why homeowners are still paying those premiums.

“There’s a couple of things in those situations: was there a mortgage on the property, what is the status of that mortgage, what are the conversations there, are they required, because of that mortgage, to maintain insurance, that’s the first question. The next question is, they still own that property, so any debris thats strewn about the property, any buildings such as sheds or garages that may still exist on that property, are there contents there? Those contents would still be covered by that insurance policy if, for example, it burnt to the ground,” said Dean. “In addition, anybody going onto the property, falling and breaking a leg, suing them, that insurance policy would still cover any liability they may have as a result of someone being injured on the property. The other piece too is while they are living in temporary accommodation, their contents would be covered if something were to happen at the site of their temporary accommodation. At the end of the day, if a homeowner determines that, even after considering all those pieces, they don’t need or want home insurance, that is ultimately their decision, but I would suggest it is absolutely the responsibility of the broker or agent to walk them through such scenarios.”

The IBC is working alongside the provincial government currently to ensure homeowners aren’t left to deal with such difficult situations in the future.

“From our point of view, we work to communicate with government anytime that we can be of assistance. We did some outreach prior to the storm and I know insurers were getting ready for Fiona, as is the case whenever we hear of a storm that has the potential to impact one of the four Atlantic provinces,” explained Dean. “We reach out to officials within public safety, so the Minister Responsible for Public Safety as well as the Minister Responsible for the Insurance Act - so that’s the Minister who regulates the insurance industry in any given province - we reach out those individuals as well as the Superintendent's office to advise on what insurers are doing and what preparations are taking place. In the case of Fiona, insurers were looking at adjuster capacity in the Atlantic region and who they might be able to bring in from other provinces if they were needed. In terms of the proactive piece, those conversations are ongoing and we look forward to being responsive and proactive in those conversations, particularly the ones that are happening on the National Flood Program and how we can work together with the representative from Newfoundland and Labrador in emphasizing the impact of Fiona and how this program for those in high-risk areas needs to be able to respond to events like this.”

Tapp said that after everything she has been through, sometimes she just wants to run away. She is dealing with high levels of stress, and it's affecting her physical health.

"We should just get back what we had. I want the same size house, same plan, everything the same, just put me right back where I was to. Not on the same land. I don't want any more than I started with but they made the decision to take my home. I didn't make the decision. So give or take a little bit, none of us are going to come out with what we had."

Jaymie White, Local Journalism Initiative Reporter, Wreckhouse Weekly News