Canada promised $450M for flood insurance — and 1.5 million homeowners are still waiting as basements fill up

Pierrefonds-Roxboro, Quebec, Canada – 29 April 2019

On the brink of summer and residents of Montreal’s West Island woke up to wet, flooded basements. About 3,500 kilometres away (and a few days apart), emergency alerts blanketed central Alberta as Edmonton’s stormwater system edged towards complete overload.

Despite the distance, the very recent flooding events in these two Canadian cities highlight the risks faced by every Canadian homeowner and resident. Without the right insurance coverage, the right endorsements, or any mitigation efforts and the full impact of flood damage — physical, emotional and financial — rests with you.

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But this issue isn’t new. The federal government has known this problem existed since at least 2019, when it first promised a national low-cost flood insurance program. Every federal budget from 2021 to 2024 has pledged to make good on this national initiative. The most recent was the April 2025 election campaign, that pledged $450 million over five years with a deadline for the launch of this national insurance program in April 2026 (1). As of mid-June, there is still no confirmed timeline for delivery of the program, according to the Insurance Bureau of Canada (IBC) (2).

For the estimated 1.5 million Canadian households at the highest flood risk, this delay is not abstract (3). It means some homeowners cannot obtain flood coverage at any price — and must pay out of pocket, absorb the loss or rely on disaster financial assistance after the fact (which does not make them whole).

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What your home insurance almost certainly doesn’t cover

To be clear, a standard home insurance policy in Canada does not include flood protection.

Overland water coverage — the endorsement that protects against rainfall, snowmelt and rising freshwater entering your home — must be added separately, according to the Financial Consumer Agency of Canada (FCAC). Sewer backup coverage is a separate endorsement as well.

Sadly, many homeowners discover this only after a claim is denied. That’s because how water entered and damaged your home matters. While water damage from a burst pipe is typically covered, water entering through your foundation during a downpour is not, unless you have purchased additional coverage (such as overland water protection).

According to Allstate Canada (4), external water damage — including heavy rain and overland flooding — accounted for nearly a quarter of all home insurance claims in 2025, and water damage overall represented more than 40% of all home insurance claims between 2021 and 2025.

Despite the prevalence of water damage and the rise in water-related claims, many homeowners and tenants still misunderstand what’s covered under home insurance and the availability of extra riders.

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Where the private insurance market is already pulling back

Overland water coverage was available for purchase by most Canadians, although the cost varied widely by location and risk profile. However, for the roughly 10% of Canadian households deemed at the highest flood risk, the story is different. According to the IBC, some insurers are “reducing their coverage or their exposure in certain regions” as climate-driven losses accelerate. For some, this can mean much more expensive coverage options — or no coverage at all.

Annual insured losses reached $9.4 billion in 2024 — the highest figure ever recorded in Canadian history, and nearly 12 times the annual average of $701 million from 2001 to 2010 (5). In fact, four of the last five years now rank among the 10 costliest on record for insured losses. And in 2023 and 2024, Canada’s property and casualty insurers recorded net underwriting losses — a problem for larger firms, which are held accountable by shareholders, including large pension funds.

What does this mean for high-risk homeowners? It means fewer choices, higher costs and more risk as fewer insurers become willing to offer coverage. For insurers still willing to offer coverage, the premiums are rising rapidly — in some cases as much as $15,000 annually just to get coverage. Those who are denied flood coverage entirely have limited recourse beyond the federal Disaster Financial Assistance Arrangements (DFAA), which provides post-event government relief but does not replace insurance.

What the $450 million federal promise actually promised

The concept of a national flood insurance backstop has been in federal discussion since 2019. In 2020, a task force was established, and in 2022, a report was released; federal budgets in 2023 and 2024 each committed to delivering a program, and Budget 2024 named a Canada Mortgage and Housing Corporation (CMHC) subsidiary as the proposed federal reinsurer. (6) While the Federal-Provincial-Territorial Working Group on Flood Insurance began meeting in January 2025 to finalize program design, with an April 2026 target, the deadline has now come and gone — with no real update.

Earlier this month, IBC’s Director of Federal Affairs, Rachel Barry, confirmed (2): “There’s no timeline that I can share right now from government.” B.C.’s Minister of Emergency Management Kelly Greene put it more directly (7): “My concerns right now are that the program appears to be stalled.”

The promise of this national flood program was designed to function as a low-cost reinsurance backstop — meaning public funding would help cover the risk that private insurers cannot price affordably for high-risk homes. The program was never meant to replace private market coverage. However, until it launches, the gap remains unfilled.

How to check whether your home is protected — what to do if it isn’t

The first step for any homeowner is to review their current policy for two specific endorsements: Overland water coverage and sewer backup coverage. Neither is included in a standard policy by default. If you cannot locate them in your policy documents, contact your insurer or broker directly to confirm your coverage before flood season peaks.

If overland water coverage is available for your home but you have not added it, the cost for lower-risk properties typically runs between $10 and $30 per month — a fraction of what uninsured flood damage can cost. Some insurers will reduce premiums if you have installed a backwater valve or sump pump, so it is worth asking.

If you have been refused flood coverage entirely, document that refusal in writing. Homeowners who cannot obtain insurance and experience a flood may qualify under federal or provincial disaster assistance programs. Keeping a written record of a denial can support that application.

For homeowners uncertain about their property’s flood risk, Public Safety Canada is developing a national flood risk portal to allow searches by postal code. That portal, funded separately from $15.3 million of government funds, was anticipated to be launched by the end of 2025 but has not yet been released as of mid-2026. In the interim, some municipalities and provinces maintain their own flood plain mapping tools.

Canada promised $450M for flood insurance — and 1.5 million homeowners are still waiting as basements fill up

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