Alberta flood losses as high as $5 billion

Estimates of water-logged Alberta's losses are flowing in at roughly $5 billion, but insured damages are expected to be far less than that in what can only be seen as a questionable deal for residents affected by the floods that hit one week ago.

The $5-billion figure "in annualized terms" comes from the Canadian Imperial Bank of Commerce, which on Wednesday estimated the natural disaster would cut roughly 0.3 per cent of growth nationally for June.

"While damage assessments are still being conducted and the region continues to struggle in the aftermath of the disaster, the economic and fiscal ramifications of the incident are likely significant," CIBC World Markets economists Warren Lovely and Emanuella Enenajor said in a note, which also pegged the hit to Alberta GDP in the third quarter could be over 5 per cent annualized.

If that weren't concerning enough, residents have to face the economic hit on a personal level. The insured damages could be as high as $3.75 billion, and that leaves roughly a quarter of total losses unaccounted for, according to the Bank of Montreal.

The discrepancy has put the issue of overland flooding insurance under the spotlight because Canadian insurers traditionally don't cover personal property losses if water seeps into your property from above ground, through cracks, doors and windows.

Industry says there's a miniscule percentage of policyholders that live in flood-prone areas so premiums are sky high and most people don't pay for the coverage. They also suggested governments should do more.

But Ottawa says it's not in the business of negotiating people's insurance or policies, according to a CTV report that quoted Calgary southeast MP Jason Kenney. But he also reportedly said government will speed up the process of getting unemployment insurance benefits to people who lose their jobs because of the flooding.

For now, the Alberta government has pledged $1 billion in flood relief. Citizens and businesses are doing their part, pouring millions into flood relief.

Tom MacKinnon, an analyst at BMO Capital Markets, said the "very preliminary" estimates of damages from the Alberta flooding are between $3-billion and $5-billion. But insured losses were pegged at between $2.25-billion to $3.75 billion, or roughly about 75 per cent of overall damages.

His analysis focused on the flood's impact on Intact Financial, which has some 17 per cent of Alberta personal property insurance, 11 per cent of the commercial property market and 20 per cent of the personal auto market.

The difference between forecasted total and insured losses is largely due to the fact there is no overland flood insurance in Canada, says Steve Kee of the Insurance Bureau of Canada.

Water damage endorsements on home policies typically cover sewage backups, while comprehensive coverage on auto policies usually cover flooded vehicles. "You need to figure what's covered, what's not and what's your next step," says Kee, stressing homeowners should do whatever they can to document everything, damaged or not, to ensure their claims are processed smoothly.