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A brief primer on government disaster assistance in Canada

By Ryan L. C. Quan https://commons.wikimedia.org/w/index.php?curid=26873355

Nine provinces and one territory in the country have a disaster assistance program designed to help homeowners, renters, small business owners, not-for-profits and local governments recover after a loss event. Prince Edward Island, Yukon and Nunavut do not currently have such a program and, thus, when they need access to funds as the result of a disaster, they retain a certain amount and apply for reimbursement for the rest using the formula outlined in the federal framework (see below).

While each provincial disaster assistance program has its own variations, the programs probably have more on common which each other – at least in principle – than not.

For the most part, provincial disaster assistance is intended to provide funding to those who suffered loss and damage from an event that is uninsurable (i.e. where private insurance is not reasonably or readily available). Some provinces use the term ‘uninsurable’ but leave out any further explanations, while others (like British Columbia) explicitly set out which hazards the program won’t cover (“Insurable damages in the private sector from  wildfires,  earthquakes , snow load, wind storms, sewer or sump pit back-up, water entry from above ground (including roofs, windows or other areas of the building), are NOT eligible for DFA.”)

Some provinces offer very specific lists of items they will cover, with only a few having no limits on replacement items (most will only cover basic or standard replacement models). For example, Manitoba offers coverage for:

Homeowners:  Beds, essential furnishings, essential clothing and primary appliances (eg. furnaces, water heaters, fridges, stoves, computers and televisions).

Business owners: Supplies, essential work clothing and other necessities.

Agricultural claims: Livestock fencing, staged and stored crop and some field erosion. DFA may also help cover the cost of clean-up, repairs and temporary relocation.

Most programs offer very specific payout caps, while only a couple do not.

 

Coverage limits

Item limits

British Columba

80% of eligible damage to $300,000

No item limits

Alberta

No cap

Basic models

Saskatchewan

95% of eligible damage to $240,000

No item limits

Manitoba

80% of eligible damage to $240,000

Basic models

Ontario

90% of eligible damage to $250,000

Basic models

Quebec

80% of eligible damage to $150,000

Basic models

New Brunswick

100% of eligible damage to $120,000

Basic models

Nova Scotia

100% of eligible damage to $80,000

Basic models

Prince Edward Island*

No DFA program

Newfoundland & Labrador

No cap

No item limits

Yukon

No DFA program

Northwest Territories

80% of eligible damage to $100,000

Basic models

Nunavut

No DFA program

* The PEI Emergency Measures Organization is currently working on formalizing a provincial framework which aligns with the other Atlantic Provinces.

 

Virtually all provincial programs are very explicit about covering primary residences only (like Saskatchewan, Manitoba and Ontario).

Some programs require that local governments apply to their respective provincial government to get recognized for assistance before individuals can apply themselves (like Saskatchewan and Alberta), while others allow applications by anyone once the province declares an event to be eligible for assistance. British Columbia and New Brunswick are examples of two provinces that provide a running list of active eligible disasters on their respective disaster assistance web pages.

Here are links to the major provincial disaster assistance programs in Canada:

British Columbia – Disaster Financial Assistance (DFA)

Alberta – Disaster Financial Assistance (DFA)

Saskatchewan – Provincial Disaster Assistance Program (PDAP)

Manitoba – Disaster Financial Assistance (DFA)

Ontario – Disaster Recovery Assistance for Ontarians (DRAO)

Quebec – Financial Assistance For Disaster Victims

New Brunswick – Disaster Financial Assistance (DFA)

Nova Scotia – Disaster Financial Assistance (DFA)

Newfoundland & Labrador – Disaster Financial Assistance Program (NL-DFAP)

Northwest Territories – Disaster Financial Assistance

 

Federal Disaster Financial Assistance Arrangements (DFAAs)

The provision of federal disaster assistance seems to be where most people get confused about how disaster assistance works in Canada.

As noted on Public Safety Canada’s website, “In the event of a large-scale natural disaster, the Government of Canada provides financial assistance to provincial and territorial governments through the Disaster Financial Assistance Arrangements (DFAA), administered by Public Safety Canada.  When response and recovery costs exceed what individual provinces or territories could reasonably be expected to bear on their own, the DFAA provide the Government of Canada with a fair and equitable means of assisting provincial and territorial governments.”

Federal disaster assistance is paid by the federal government to provinces and territories and not directly to individuals or non-governmental entities. One of the most commons misconceptions is that individuals can apply directly to the federal government for assistance, but this is not the case.

DFAAs work on a cost sharing basis and uses a formula. For the period January 1, 2019 to December 31, 2019, the formula is as follows:

 

Eligible provincial expense thresholds

(per capita of population)

Government of Canada share

(percentage)

First $3.19

0

Next $6.39

50

Next $6.39

75

Remainder

90

 

Thus, the DFAAs work in a similar manner to reinsurance.

Public Safety Canada provides the following as an example of how the DFAAs would work for a disaster in a province with a population of 1 million where the total eligible expenses for responding to and recovering from a disaster are $20 million:

 

Eligible Expenditures

Provincial or Territorial Government

Government of Canada

First $3.19 per capita (100% provincial/territorial)

$3,190,000

Nil

Next $6.39 per capita (50%)

$3,195,000

$3,195,000

Next $6.39 per capita (75%)

$1,597,500

$4,792,500

Remainder (90%)

$403,000

$3,627,000

TOTAL

$8,385,500

$11,641,500

 

Disaster assistance and overland flooding

As noted at the outset, provincial disaster assistance is intended to provide funding for uninsurable losses. As such, and because many hazards are insurable in Canada, the bulk of provincial and federal disaster assistance paid out historically has been for overland flood. But this, it appears, will change.

With the introduction of overland flood insurance in Canada in February 2015, and with several companies now offering the coverage, some provincial disaster assistance programs have made it clear that the writing is on the wall for the payment of disaster assistance for overland flood.

On the webpage for its disaster assistance program Alberta, for instance, notes that “Because the DRP [Disaster Recovery Program] provides assistance for damages that are considered uninsurable, overland flood insurance may soon impact eligibility for DRP assistance.”

Likewise, Saskatchewan notes that “…insurance providers recently started to offer policies that protect homeowners from overland flooding. The Government of Saskatchewan advises all property owners to obtain adequate coverage for their property.” The province has made available an Overland Flood Insurance fact sheet and advises property owners to contact their insurance company about flood coverage.

And in British Columbia, a letter was issued by Emergency Management BC (EMBC) in May 2016 outlining the development of the burgeoning flood insurance market in Canada. The letter warns: “Over the next several years as additional insurance options roll out, EMBC will apply discretion in how it determines eligibility. For example, a homeowner or tenant would not be expected to amend their existing policy as soon as overland flood insurance becomes available. But, DFA may be denied if overland flood insurance was available on renewal and they chose not to purchase it.”

There is an intricate, often complicated relationship between the existence or availability of private insurance and the provision of provincial disaster assistance. This relationship has taken a few new twists with the introduction of overland flood insurance in the country. And, so, it is worth keeping on eye on how provincial disaster assistance programs deal with the proliferation of overland flood insurance products and how they decide what the impact will be on the provision of disaster assistance.

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