As Canadian cities struggle to create housing, some homeowners and other landlords are converting basements into rentable living spaces. But major floods in Toronto last July, which racked up nearly $1 billion in insured losses, raise questions about whether owners and tenants are properly insured.
Many homeowners woke up to find their basements flooded during the July 2024 floods, and Canadian Mortgage and Housing Corporation data from 2021 shows there are roughly 75,000 basement apartments across the Greater Toronto Area, as noted by Rates.ca.
Related: Toronto’s July flood losses rise to nearly $1 billion
“Most tenants only think about the contents of their apartments when they take out tenant insurance policies, but the real issue is finding a place to live if their apartment floods or is otherwise made unlivable,” says Daniel Ivans, a licensed broker and insurance expert for Rates.ca. “Most basement floods can take weeks to repair. In the event of a city-wide flood, like the one we saw in the GTA last July, that timeline can stretch to months as many claims are processed at once and systems are overloaded.
“Some will be fortunate enough to move in with friends or family, but if those options aren’t available, securing a temporary place to live becomes a real concern, especially in an expensive rental market with low supply.”
Further, rising NatCat rates mean adjusters and other personnel handling tenant claims and landlord flood restoration claims can easily be overwhelmed by the sheer number of cases requiring their response.
Customers filed more than 228,000 claims for the four NatCat events across Canada in July and August in July 2024. That’s more than double the number recorded by that same time in summer 2023 (113,000) according to Insurance Bureau of Canada.
Related: What rising NatCats mean for Canada’s homeowners
Toronto’s July flood contributed $991 million to Canada’s costliest insured loss year from severe weather events, totalling $8.5 billion in 2024, Catastrophe Indices and Quantification Inc. reported earlier this month.
Additionally, two more days of heavy rainfall and thunderstorms in the GTA on August 17 and 18, 2024 caused over $100 million in insured damage. That raises the region’s flood-related insured loss total to over $1 billion in just a month.
These intense storms illustrate how “climate change-induced extreme weather patterns intensify year-over-year,” notes Rates.ca, adding tenants renting basement apartments are becoming more vulnerable to flood damage.
Feature image by iStock/skrum
