The news that a Toronto shelter was facing $250,000 in damages after heavy rain—and that their insurance provider would likely not cover the cost—is a nightmare scenario for any property owner. According to the recent CTV article, the denial appears to hinge on the fact that the water “came from an outside source.”
This is a story I see often in my practice. A property owner suffers a devastating flood. They make the panicked call to their insurance company, only to be told that their policy doesn’t cover “overland flooding.” Or, they have a “sewer backup” endorsement, but the $25,000 limit doesn’t cover the cost of the remediation.
For many, this is the end of the road. They absorb the financial loss, pay for a patch-up job, and pray it doesn’t happen again.
But what if the insurance denial is a clue that the real problem isn’t just the rain, but how your home was built? As a construction negligence litigation lawyer, I often see that the water is just a symptom. The disease is a construction defect.
When your basement floods, you’re not thinking about how the water got in; you’re thinking about how to get it out. But for your insurance company, the “how” is everything.
Insurance policies are notoriously specific. A standard policy might cover sudden, accidental water damage, like a burst pipe. However, they frequently exclude damage from ice buildup or “overland flooding”—water seeping in from an outside source.
Even when a policy applies, coverage limits are often shockingly low. Worse, your policy is designed to cover the consequential damage—the ruined carpets, the wet drywall, the damaged furniture. It is not designed to pay for the root cause, such as excavating your foundation, re-grading your property, or fixing the foundation cracks.
That fix is your responsibility, leaving your home vulnerable to the next storm unless you pay for professionals to identify and fix the problem.
The CTV article noted that the shelter “appears to have long-standing issues with grading and waterproofing.” This is the key. The building isn’t just a passive victim of the weather; it is failing in its primary duty to keep the elements out.
This is the core of a construction negligence claim. In Ontario, builders, contractors, designers, and municipal inspectors are required to adhere to the Ontario Building Code and industry standards of care. When they fail, causing you financial loss, they can be held liable.
Common construction defects that lead to water intrusion include:
Depending on the circumstances, a claim may be brought against the original builder, designers, or the municipality responsible for inspecting construction.
You may still have a claim against the original builder, the municipality (for negligent inspection), or the previous owner. A seller must disclose any “latent defect” they are aware of, meaning a hidden, significant flaw not discoverable on a routine inspection. If you can prove the prior owners knew about the flooding and actively concealed it (e.g. by painting over water-damaged framing or mould), or lied on a Seller Property Information Sheet, you may be able to hold them responsible.
After a flood, your priority is safety and mitigating immediate damage. You should notify your insurer who will likely call an emergency restoration company to pump out water and begin professional drying. This is critical to prevent mould and stop the damage from spreading.
However, once this emergency “rip-out” and “dry-out” phase is under control, a crucial decision point arrives. Before you hire a contractor to start the permanent, structural repairs—like re-grading, excavating the foundation, or even just putting up new drywall—your next call should be to an experienced construction litigation lawyer.
Here’s why this timing is so important:
Restoration crews remove wet materials, often exposing the very defect that caused the flood—a foundation crack, a failed seal, or bad waterproofing. This critical evidence is often exposed at this exact moment. Before a contractor covers it up, a lawyer will retain a forensic engineer to inspect and document the source of the failure. This “cause and origin” report is the foundation of your case. Repairing the defect before this inspection can destroy the proof you need.
A restoration company dries your house. A general contractor may just patch it up. A lawyer, working with an engineer, ensures you get a permanent solution based on a proper diagnosis, not a cosmetic repair that will fail again.
A key benefit of hiring a lawyer is our roster of trusted professionals. We don’t just sue; we help clients solve complex problems. We will connect you with a forensic engineer to find the defect and then, based on their report, find specialized contractors to properly remedy it.
A major flood is devastating. Once the panic subsides and your home is dry but not rebuilt, a strategic pause for legal advice can mean the difference between a temporary patch and a permanent solution—and the difference between you paying for it, or the people who caused the problem.
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It is a fundamental strategic decision in litigation: to offer nothing, or to offer next to nothing, in hopes of forcing a plaintiff to abandon