During or following a disaster, the Government of BC may declare the event eligible for Disaster Financial Assistance. Once declared, the DFA program may compensate individuals for essential uninsurable losses and may reimburse local governments for damaged infrastructure. DFA has specific eligibility requirements and limitations, such as primary residence and a maximum residential claim of $300,000.
The purpose of DFA is to help individuals, small business owners and local governments recover from uninsurable disasters and, in some cases, to supplement insurance coverage. The DFA program operates under the Emergency Program Act (EPA) and the ensuing Compensation and Disaster Financial Assistance Regulation and is required to provide compensation in compliance with this legislation. The EPA is however, undergoing a modernization process. A new Act is anticipated in 2020.
Currently, the Act defines “uninsurable losses” as follows: “eligible costs do not include costs or expenses… for which insurance was reasonably and readily available”. Until recently, overland flood insurance was not available for residential properties, therefore residential overland flood losses were historically covered through DFA.
Emergency Management BC (EMBC) is monitoring the availability of overland flood insurance in BC. If a flood disaster occurs and DFA is authorized for the event, an applicant who could reasonably and readily have purchased overland flood insurance, and did not acquire this insurance, would NOT be eligible for DFA. As additional insurance options become available, EMBC will apply discretion in how it determines eligibility for DFA. For example, a homeowner or tenant would not be expected to amend their existing policy immediately as overland flood insurance becomes available, but DFA may be denied if overland flood insurance was available on renewal and the claimant chose not to purchase it. See the IBC Report of the National Working Group on Financial Risk of Flooding.
The previously limited insurability of flood risk in Canada has meant that historically, taxpayers have borne a significant burden for flood damages incurred across the country, as is evident by examining spending on the Disaster Financial Assistance Arrangements (DFAA) program. Since the 1970s, federal payments for flood assistance have totalled $6.2 billion — or 70% to 80% of total DFAA spending. These costs have more than quadrupled in 40 years, swelling from a cumulative $300 million in the 1970s, to $1.2 billion in the 2000s, to a staggering $3.7 billion from 2010–2014. See the IBC Report of the National Working Group on Financial Risk of Flooding.While the recent restructuring of the DFAA has devolved more of these costs to provincial governments, taxpayers remain the primary funding source for flood loss compensation.