Water damage claim denied in Ontario: what to do next

This is general information, not legal or insurance advice. Policies differ, and deadlines apply to disputes. For advice about your situation, speak to your broker or a lawyer.

Start with the reason

A denial should come with a reason. Ask for it in writing, and ask the insurer to identify the exact policy wording it relies on. You cannot respond to a denial you do not understand. Ask too for a copy of your full policy, including the declarations page and every endorsement, if you do not have one.

The common reasons

The cause is not covered by the policy you bought. Standard home policies generally cover sudden and accidental escape of water from plumbing and appliances. They generally do not cover, unless you added the endorsement:

• Sewer backup
• Overland water, meaning water entering from the surface, rivers or heavy rain
• Ground water or seepage through the foundation, which is often excluded altogether

Many denials come down to which kind of water it was. See sewer backup insurance and overland water coverage.

The damage was gradual. Insurance covers sudden events, not slow leaks, repeated seepage, rot or deterioration. An adjuster who sees long-standing staining, decay or established mold may conclude the leak was going on for a long time.

Maintenance or wear. A roof at the end of its life, failed caulking or a known problem left unrepaired.

Freezing while away. Many policies exclude freezing damage in the heating season if the home was unoccupied beyond a stated number of days, unless someone was checking it daily or the water was shut off and drained.

Vacancy. Coverage is often restricted once a home has been vacant for a set period.

Late reporting, or failing to protect the property. Policies require prompt notice and reasonable steps to prevent further damage.

Misrepresentation. Information on the application or in the claim that the insurer says was inaccurate.

The limit was reached. Endorsements such as sewer backup often have their own, lower limit. This is a partial payment, not a denial, but it can feel the same.

Only part is excluded. Policies commonly cover the resulting water damage but not the repair of the failed part itself.

Check the denial against the policy

Read the sections the insurer cites, then read the rest:

• The insuring agreement: what the policy says it covers
• The exclusions, and any exceptions to them
• Each endorsement and its limit and deductible
• The conditions: your duties after a loss

Look for whether the facts fit the exclusion. “Gradual” and “sudden” are questions of evidence, and so is where the water came from.

Gather your evidence

• Photographs and video, with dates, from the day you found the damage
• The plumber’s or roofer’s report on what failed and when
• The failed part itself, if you still have it
• The restoration contractor’s moisture readings, drying records and notes on the source
• Receipts for emergency work
• Records showing the home was occupied and maintained
• Weather records for the date, where relevant
• A timeline of what happened and who you spoke to

A written opinion from a qualified plumber, roofer or engineer on the cause and likely duration of the leak is often the most useful single document where the dispute is about gradual damage or the source of water.

Use the complaint process, in order

1. Speak to the adjuster and then their manager. Explain what you think was missed and send your evidence. Your broker can help and can speak to the insurer for you.
2. Write to the insurer’s complaint liaison officer or ombudsperson. Every insurer in Ontario must have a complaint handling process. Ask for the contact. Set out the facts, the policy wording and what you are asking for.
3. Ask for the insurer’s final position letter if the complaint is not resolved.
4. Take it to the General Insurance OmbudService (GIO). It is an independent service for home, auto and business insurance disputes and is free to consumers. It generally requires that you have a final position letter first.
5. The Financial Services Regulatory Authority of Ontario (FSRA) regulates insurers’ conduct. It does not decide whether a claim should be paid, but it accepts complaints about how you were treated.

Disagreements about the amount

If the insurer accepts the claim but you disagree about the value of the loss, Ontario’s Insurance Act provides an appraisal process for disputes over value or amount. It does not decide whether there is coverage. Ask your insurer or broker how to start it.

Legal action and deadlines

You can take legal action against an insurer, and there are time limits for doing so. Ontario’s general limitation period is two years, but property insurance policies can carry a shorter one: a condition requiring legal action to be started within one year of the loss is common, and courts have enforced it. Working out which period applies, and when the clock started, is not always simple. If the amount is significant, speak to a lawyer early rather than after the complaint process has run its course.

Meanwhile, deal with the water

A denial does not stop the damage. Wet materials grow mold within days whatever the insurer decides, and a claim that is later accepted can be reduced if the damage was allowed to get worse. Have the property dried, keep every receipt and record, and argue about payment afterwards.

Reducing the chance next time

• Add sewer backup and overland water coverage if they are available for your address
• Read the freezing and vacancy conditions before you travel
• Fix small leaks promptly, and keep the receipts
• Photograph your home and belongings now

More: water damage restoration.