Flooding is becoming more common across Canada. Public Health Canada reports that most regions will see not only higher average rainfall but also more intense extreme rainfall in the years ahead, increasing the frequency and severity of flood events.
Climate change is expected to bring more extreme storms, faster snowmelt and rising sea levels, all of which raise flood risk from coast to coast. Floods can affect homes directly, and standard homeowners insurance typically does not cover overland flooding. In response, the federal government announced $31.7 million in funding over three years in March 2023 to develop a low-cost national flood insurance program aimed at protecting households at high risk.
How does overland flood insurance currently work in Canada?
At present, only a small number of insurers offer overland flood coverage, which applies to flooding caused by storm surge, heavy rainfall that overwhelms stormwater systems, or other overland water flow. This coverage is usually sold as an endorsement or rider—an add-on to a standard home insurance policy. According to the Insurance Bureau of Canada (IBC), many homeowners in flood plains or low-lying coastal areas are not eligible to purchase these endorsements because their locations are considered too high-risk.
Why does Canada need a national flood insurance program?
Canada currently lacks a nationwide flood insurance program. Because private insurers often decline to insure properties in predictable flood zones, many homeowners in those areas have limited options. Historically, affected residents have relied on federal disaster assistance, but those payments can take years to materialize and may not provide full recovery.
Relocating homes away from flood-prone areas is a potential solution but is difficult to implement at scale. Housing shortages in many regions and the social and cultural impacts of relocation—especially for Indigenous communities—make buyouts and moves complicated and often impractical.
Flooding is widely recognized as the dominant climate-related threat to Canadian properties and is one of the most costly hazards facing urban areas. Research cited by the IBC and academic studies show that water-related losses have become the leading cause of property insurance claims, surpassing fire and theft. An estimated 1.5 million homeowners live in high-risk flood areas, and severe floods in recent years have caused widespread damage in communities across the country.
The national flood insurance program is intended to ensure that all Canadians can access flood coverage, including those who are currently unable to buy private flood insurance even if they can afford it. The goal is to provide predictable, comprehensive coverage that offers homeowners financial security in the face of repeated or severe flooding.
How will Canada’s national flood insurance program work?
The government aims to launch the national flood insurance program on April 1, 2025. Once operational, the program will allow all homeowners to purchase flood insurance, including properties in high-risk areas. Premiums for homeowners in those zones will be subsidized so coverage remains affordable.
The program is expected to combine risk-based pricing with government support. Premiums will be capped and partially subsidized, while reinsurance—financial backstopping—would be provided through a Crown corporation to stabilize losses. Officials and industry representatives are still developing the specific premium calculations and coverage details, which will likely factor in both property risk and home value.
In the program context, “flooding” refers specifically to overland flood events. It does not refer to water damage from sewer backups (which is generally excluded from standard policies) or to internal incidents like burst water pipes (which are typically covered by standard home insurance).
A government task force published model scenarios in its Adapting to Rising Flood Risk report, including illustrative figures such as a $3,000 annual premium cap for $300,000 in coverage. These examples are theoretical, based on 2020 dollars, and do not represent final policy or pricing.
What about other climate-related disasters?
Following the national flood insurance rollout, plans are already being discussed to expand coverage for other climate perils. Earthquake insurance is expected to be addressed next, particularly in regions where uptake is currently low or gaps in coverage exist. Over time, programs may be designed to include additional risks such as wildfire, evolving from a reactive disaster-assistance approach to a more proactive insurance-based model.
Overall, the federal initiative signals a shift toward collaboration between government and insurers to help homeowners remain in their communities while improving financial resilience to climate-related hazards.
Read more about home insurance:
- Does your home insurance cover water damage? Probably not
- Home insurance: Are you covered for wildfires, floods and other climate-related disasters?
- Does home insurance cover wildfire damage?
- I discovered water damage in my home. Will insurance cover me?