Water damage is now Canada's top home insurance claim — and your deductible may be growing

Here’s what changed, why it’s happening now, and how to check your own policy before the next thaw or storm puts it to the test.

Why water became a major threat to Canadian homes

For years, fire and theft dominated the home insurance conversation. But water damage from burst pipes and leaking appliances to sewer back-up and overland flooding is now the single biggest driver of claims industry-wide.

The shift has been driven by several factors. Canada’s aging infrastructure means more water mains and residential plumbing systems are reaching the end of their expected lifespan, according to RBC Insurance. At the same time, roughly 1.5 million Canadian households, about 10% of the total, are located in areas with a high risk of flooding. Add in more frequent heavy rainfall and rapid spring thaws, and insurers are paying out water damage claims at a pace that’s changing how they price and structure coverage.

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Why ‘my policy covers water damage’ isn’t enough

A standard home insurance policy generally covers sudden and accidental water damage that originates inside your home, such as a burst pipe or an overflowing washing machine.

But when water enters from outside, it usually isn’t covered. Sewer back-up and overland water — the overflow of a nearby lake or river, or surface water from heavy rain — are optional endorsements that need to be added separately, and not every home qualifies to buy them.

The deductible catch insurers are adding

Even with coverage in place, the amount a homeowner pays before insurance kicks in is rising. Insurance brokers report that Aviva Canada introduced a mandatory minimum deductible of $2,500 for water-related losses in 2024, applying to claims where water is the primary cause. I should point out that this figure comes from brokerage reporting rather than from Aviva’s own public policy pages, so you should confirm current deductible minimums directly with your broker or in your policy document.

Using a $2,500 deductible as an example, a homeowner facing a $6,000 basement flood claim under a policy with a $2,500 minimum water deductible would recover $3,500, a much bigger hit than the $500 or $1,000 deductible many Canadians assume applies to every claim on their policy.