Fiona’s insurance bill could reach $700 million – but most damage won’t be covered

Hurricane Fiona is on track to become the costliest storm to ever hit Atlantic Canada – and most of its toll will not be covered by insurance.

DBRS Morningstar analysts believe the storm, which tore through Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and eastern Quebec last weekend, caused between 300 and 700 million dollars of insured losses to the local economy.

But this figure is far from the true cost of the storm, because the gaps in the insurance system mean that most damage will not be covered.

While most residential home and property insurance policies typically cover damage from high winds, downed trees, and water damage from leaky roofs, this is not the case for the type of flooding caused by storm surges – which were a big part of Fiona. anger.

« Sea waves are not covered in most cases, » said Marcos Alvarez, global head of insurance at DBRS Morningstar. « You buy this coverage separately in most of your policies in Canada. »

However, most people who need it don’t have it, because it’s hard to get and often prohibitively expensive.

This is the situation of David Farrell, a homeowner from Rose Blanche-Harbour le Cou, NL, who was inside his seaside home when the storm hit , leaving it damaged beyond repair.

« I don’t have any insurance, » he told CBC News of his 15-year-old home. « When I bought the place, the building inspector said, ‘You live above salt water…you can’t have any. « »

WATCH | A Newfoundland homeowner describes the moment Fiona struck:

He is not alone in his situation. Although the storm’s impact was devastating for the local community, Alvarez says it pales in comparison to the financial toll of other natural disasters, like the wildfire that leveled much of Fort McMurray. in 2017, and the ice storm that hit Ontario and Quebec in 1998, calamities for which the insurance bill ran into the billions.

While homeowners will likely find that most flood damage is not covered, businesses in the area will likely be in better shape from an insurance standpoint.

« Commercial customers will be more likely to have flood insurance, » Alvarez said. « It’s not just the damage you’ll see covered by insurance… but also business interruption losses – if they can’t operate or they can’t get access to the property for a certain period of time. number of days, this will also be covered. »

As the industry tries to adapt to meet the needs of the region, it is clear that the economy is changing rapidly. « While this storm alone is not enough to say that climate change is worsening Atlantic Canada’s risk exposure to major storms, insurers will likely be more cautious in the future when modeling catastrophe risk in this storm. region, » Alvarez said.

“Labour shortages and inflation have increased the cost of rebuilding damaged assets, which will lead to increased insurance claims. Together, these factors will force insurers to raise premiums to maintain profit margins. in the future. »

Much of the damage will not be covered by insurance policies, federal government programs will be there to fill in some of those gaps. But exactly how much is unclear.

« These kinds of events are unfortunately going to be more frequent and more destructive, » Dominic LeBlanc, federal minister of intergovernmental affairs, infrastructure and communities, told reporters on Tuesday. « Obviously, the Government of Canada will be there to share the financial aspect of this compensation. »

Gloria Haydock, consumer relations manager for the Atlantic region at the Insurance Bureau of Canada, says many people in the region are currently struggling for reasons other than property damage.

« A roof is a roof, but it’s all that’s inside…the memories, the photographs and everything else, » she told CBC News in an interview. . « It’s a tough time to go through, especially when you look around and see the devastation. »

That’s why even though his house may turn out to be uninhabitable, Farrell counts himself among the lucky ones.

“Other poor get nothing,” he said. « At least I’m lucky to have my stuff and my personal stuff. »