Until now, fresh water disasters such as flooding were excluded from home insurance policies because the risk levels are so high. Insurance companies need to have a certain amount of funds available at any given time to cover catastrophic wide-spread claims such as damage due to severe wind and hail storms, tornadoes or fires.
When many homes are affected by a single event, the costs may be greater than the funds available to pay all of the claims. For example, if one insurance company in Calgary was responsible for covering all of the damages resulting from the 2013 floods, they would go bankrupt.
That being said, many insurance companies across Canada recognize the need to offer some form of protection for homeowners, condo owners, and tenants from losses resulting from fresh water flooding, and that offering is in the form of an Overland Water Endorsement.