BrokerExamA client bought a property policy through a broker in 2015. In 2024 their basement suffered water damage, and the insurer denied the claim because the policy had no Overland Water Endorsement. That is the case study in the February 2026 issue of the RIBO Review, the newsletter of the Registered Insurance Brokers of Ontario (RIBO), and it ended with a caution from RIBO’s Complaints Committee. Behind the denial is a distinction the policy wording below draws plainly: water from the plumbing, water from the sewer and water from outside are three different losses, and a client can hold cover for one and not the others.
RIBO’s Level 1 competency profile and blueprint lists “Differences between named perils and all perils, e.g., water, fire, etc.” among the habitational topics, and the habitational practice section here has sewer backup and overland water questions. This page reads the three kinds of water through one published home policy, then a federal consumer page, then the case study.
One insurer’s wording, three kinds of water
The wording is Sandbox Mutual Insurance Company’s habitational policy H177 (October 2022). It is one Saskatchewan insurer’s specimen, not a standard form, and another insurer’s policy will use other words, other endorsement numbers and other limits. What carries across is the way it separates the three losses.
Water from inside: the plumbing
On H177’s named perils forms, water damage is an insured peril in its own right, “Water Escape, Rupture, Freezing”. It covers, for example, accidental discharge or overflow of water from a plumbing, heating, sprinkler or air conditioning system or a domestic appliance, and sudden bursting of a plumbing or heating system. The same peril then carves out what it does not include: continuous or repeated seepage or leakage, and backup, escape or overflow of water or sewage from a sewer, sump or septic system or from drains or sewers outside the dwelling. It adds that “a plumbing system does not include sewers, sumps, septic system, weeping tile, eavestroughs or downspouts”.
The comprehensive forms insure “all risks of direct physical loss or damage” and then exclude the same ground by name: flood and surface water, water below ground level coming through a foundation, wall or floor, and backing up or escape of water or sewage from a sewer, drain, sump, septic system, weeping tile, eavestrough or downspout. Each of those exclusions keeps an exception for water escaping from a watermain or a swimming pool.
So on either form, the base policy covers the burst pipe and not the sewer or the river.
Water from the sewer: sewer backup endorsements
H177 puts sewer backup back by endorsement, in two versions. End. #10, Sewer Back-up Coverage, insures property under Coverages A, B and C against “the sudden and accidental backing up or escape of water or sewage” inside the dwelling or a detached private structure from a sewer, drain, sump, septic system, weeping tile, or an eavestrough or downspout connected to a sewer. It still excludes backup from sewers or drains outside the dwelling, continuous seepage, and a dwelling under construction or vacant.
End. #9, Limited Sewer Back-Up Coverage, gives the same grant and adds two exclusions for backup that flood, surface water or ground water caused or contributed to, unless there is “clear evidence” that the water entered solely from a sewer, drain, sump or septic system in the building. End. #10 has no such exclusion, so a backup that a flood contributed to can fall inside one version and outside the other.
Water from outside: overland water
End. #11, Comprehensive Water Coverage, includes the sewer backup grant and adds water from outside. Its list includes loss caused by the rising of, breaking out or overflow of any body of water or watercourse, and by surface water entering the dwelling at or above ground level. Ground water coming through basement walls, foundations or floors is insured only when it is sudden and accidental and happens with a flood or surface water “due to an extreme weather event”. Its exclusions include waves, storm surge and ice, earth movement, a deliberate breach of a dam or dike, buildings used for business or farming, and flood damage to sidewalks, driveways, foundations and perimeter drainage.
Two definitions decide which water is which. H177 defines “surface water” as water on the ground “where water does not accumulate in ordinary circumstances”, from an unusual or rapid accumulation or runoff, including torrential rainfall. Its definition of “flood” includes the rising, breaking out or overflow of any body of water or watercourse, natural or man-made.
The federal page on overland flood insurance
The Government of Canada’s page on overland flood insurance (modified March 23, 2026) draws the same line in consumer terms. It says water damage is a basic coverage on home and tenant policies, and may cover burst pipes or hot water tank leaks, but that coverage for flooding is not typically included in a standard policy. Insurers “define and cover each type differently”, so there is not necessarily one flood product; there are endorsements, requested from a broker or insurer, and availability depends on the flood risk the insurer assesses. The page lists overland flooding, sewer backup, sump pump failure, and storm surge and tidal waves as separate things a client may need cover for.
It also names when the conversation usually happens: before buying the home, condominium or tenant policy, before each renewal, and after a claim. And it warns renters that a landlord’s insurance will not cover their personal property for overland flood damage.
The case study, as RIBO printed it
RIBO’s case studies are anonymized situations about licensees who were alleged to have breached the rules. In this one, the client alleged that Principal Broker “Sheila” did not offer Overland Water Endorsement (OWE) coverage when the client bought their property policy in 2015. The basement water damage came in 2024, and the insurer denied the claim because the client had no OWE coverage.
The alleged misconduct was a failure to serve the client in a conscientious and diligent manner, under paragraph 3 of s. 14 of O. Reg. 991, the Code of Conduct (the case study writes it as “section 14.3”). The general practice section has questions on that paragraph. In the investigation, Sheila said she did not believe OWE coverage was available in 2015 and could not confirm whether it was offered to the client or mentioned in their discussion.
The Complaints Committee cautioned her. It stated that she “had an obligation to communicate all coverages available under the insurance policies offered and ensure the insured was aware of potential coverage gaps”, that she should improve the internal process for quoting business so that all gaps are addressed, and that the brokerage should improve its communication process so clients are presented with all possible coverage options and pricing.
RIBO closed the case study with two reminders for licensees: review and explain the policy terms, what is and is not covered, before binding, so there are no coverage gaps; and keep communication clear, accurate and proper so clients are given all coverage options for their needs and the best pricing.
The case study does not say whether OWE was in fact available to that client in 2015, or at what price.
A missing water cover has also reached RIBO’s Discipline Committee. In the Galloway decision, a broker never raised the missing water damage coverage with his clients. On his guilty plea, a panel found him guilty of misconduct and ordered a reprimand, a $2,000 fine and three hours of education on client communication.