Why don insurers generally offer flood insurance?
In Canada, home insurance policies generally do not cover damage caused by water overflowing the banks of rivers or streams, or shores of lakes and oceans. The main reason is that most areas that can be flooded eventually will be. Insurance is there to compensate you financially for losses that are random and unexpected. If you live on a flood plain, there’s very little unexpected about flooding. Typically such losses occur at fairly regular, and in some parts of Canada, fairly frequent intervals. Flood insurance would be of interest only to a relatively small population of people living in areas prone to flooding, thus defeating the basic principle of insurance that the premiums of many people pay for the losses of a few. Insurance companies are unable to implement adequate loss prevention measures in order to limit their exposure to flood risks. Loss prevention measures would include preventing construction in flood plains, and upgrading dykes, flood control dams, channels and sewer
