Does Business Insurance Cover Flooding

Does Business Insurance Cover Sewer Backup and Overland Flooding?

May 15, 2025 / 5 mins read

Oh no! Your Toronto business has had a sewer backup after a blockage in the sewer pipes. Brown, smelly water has flooded your business’s basement, ruining supplies and damaging the walls, floors, and furniture. Does your commercial insurance automatically cover sewer backup damage? No, it doesn’t.

Or there’s this awful scenario: Heavy rainfall has caused water to enter your Toronto small business through its windows and doors. You have flood damage from surface water. Does your business insurance include coverage for overland flooding? In this case, your business would need to add overland flood coverage.

Western Financial Group, a 100% Canadian company, can help you navigate your business, car, and home insurance during this period of economic uncertainty.

Wherever your small business is located in Toronto, the Greater Toronto Area (GTA), or elsewhere in Ontario, a Western Financial Group business insurance broker will get you commercial coverage that uniquely protects what you do.

Western is a 100% percent Canadian company. We are a trusted, national insurance brokerage that has partnered with Canada’s top insurance companies to provide commercial insurance to businesses. We work with our insurance partners to find the best business coverage at the best rate for you.

We make the process easy by getting insurance quotes for you to choose from and giving you policy coverage options that suit your Toronto business’s specific needs.

What’s the difference between sewer backup insurance and overland flood insurance?

In both cases, the financial damage can be devastating to your Toronto small business. Here’s the difference:

Sewer backup insurance

A sewer backup occurs when waste water and sewage flows back into your business, instead of draining away from it. Brown water and sewage may pour out of your drains, sinks, and/or toilets.

Sewer backup insurance is add-on coverage (also called an endorsement) that helps protect your Toronto business against:

  • Backup from a sewer, storm drain, or septic tank
  • Damage caused by sewer backups, which includes coverage for the cost of professional cleaning or replacing walls, flooring, furniture, and other belongings
  • Overflow from a sump pump or other similar equipment.

Note that sewer backup insurance does not cover every type of water damage insurance claim.

Overland flood insurance

Overland flood insurance is available as an add-on insurance coverage for your Toronto business. It provides protection for loss or damage related to water entering a property from a sudden accumulation of water, such as from heavy rain, spring run-off, or overflow from lakes or rivers.

If you don’t have overland flood insurance, you may not be covered in this type of situation.

Did you know? Flooding and sewer backup damage can be a significant cost to businesses, causing structural damage, interrupting operations, and pushing up insurance costs. Is your business covered?

Why should my Toronto business have sewer backup and overland flood insurance?

In Canada, most standard commercial property insurance policies do not automatically cover sewer backup and overland flooding. These coverages help financially protect your Toronto business.

What else can you do to prevent sewer backup damage?

You should install a sump pump if your Toronto business has a basement, especially if you live in an area with aging municipal infrastructure.

What else can you do to prevent overland flooding?

Divert and manage any excess water away from your Toronto business. Install a sump pump and backwater valve. Clean any gutters.

How much does overland flood insurance and sewer backup insurance cost?

There isn’t a set price for either type of coverage because each Toronto business have different needs and requirements.

Factors that usually affect cost:

  • Your location
  • Type of business
  • Its size and number of employees
  • Annual revenue
  • Any past claims, such as flooding
  • Are you located in a flood zone?

What other insurance coverage helps in the case of flooding or sewer backup?

Business interruption insurance

Business interruption insurance helps support your Toronto small business when it can’t operate due to a covered loss, such as sewer backup or overland flooding damage. You’ll be responsible for bills such as repairs, rent, and payroll even if your business is forced to close temporarily without this type of insurance.

Some examples of losses that can force your business to shut down:

  • Your business is damaged by fire or vandalism
  • A disruption in your supply change
  • Damage to a neighboring business prevents your business from operating

Business interruption insurance can help with expenses such as payroll, rent, utilities, property taxes and relocation of your business.

Business interruption insurance is typically purchased as an add-on or endorsement to a standard commercial property insurance policy, rather than a standalone policy.

What kind of water damage does commercial property insurance cover?

Commercial property insurance typically covers water damage resulting from sudden and accidental events, like burst pipes, leaks, or damage from a storm. Note that gradual water damage from leaks or seepage is often excluded because it's considered preventable with proper and regular maintenance.

What other business insurance coverages do Toronto businesses need?

What do I do if I have a claim against my Toronto business?

Contact your broker immediately after any business-related mishap. Waiting to file a claim can confuse insurers about the severity of the damages to your business.

  • Know your policy so that when you contact your broker you are familiar with what will be covered or not.
  • Document the damage. Take photos right away and write down what happened.
  • Do not throw away damaged goods after taking photos. Keep the physical evidence so that your adjustor can see it.
  • Do not invite lawsuits. Don’t say anything that could be used against you, especially if you aren’t sure what happened.
  • Be honest about what your damaged property is worth. Damaged commercial property is generally valued according to its actual cash value or replacement value.

Here’s a business insurance checklist:

  • Do you have the best Toronto business insurance rate that suits your work?
  • Do you have the right amount for your deductible and regularly review it to make sure it’s the right amount for you?
  • Are you or your employees using personal vehicles for work?

Western Financial Group has licensed BUSINESS INSURANCE EXPERTS to get you the right insurance coverage as a Toronto business owner. Our experts are available now to help you navigate the business insurance journey to protect your Toronto business.

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