Money · the arithmetic nobody explains

Deductibles, estimates and who pays the difference

There is a sentence in the Insurance Bureau of Canada’s guidance to homeowners that determines more outcomes than any other on this site, and it is written in the flattest possible language: the policyholder is responsible for any difference if a contractor’s charges exceed the insurer’s estimate.

That is the whole game. Not whether you are covered — whether the number your restorer writes and the number your insurer writes are the same number.

The three ways a claim gets settled

IBC states that insurance companies generally offer three options for damaged or stolen items: “repair, replace or reimburse”.

Repair is the usual answer for building damage. Somebody dries, removes and rebuilds, and the work is scoped against an estimate.

Replace is the usual answer for contents. The sofa, the boxes in the storage room, the contents of the chest freezer.

Reimburse is a cash settlement. It is worth understanding the trade: it gives you control and it transfers the risk of the scope being wrong from the insurer to you. If the drying turns out to need three more days than the estimate allowed, that is now your problem.

And in all three, the same constraint applies: a contractor's charges above the insurer's estimate come out of your pocket.

Your deductible, and the ones you did not know you had

The deductible is what you pay before the policy responds. On a water claim it is rarely one number.

Both of the optional water endorsements frequently carry their own deductible, separate from the policy deductible and often larger. That is not a trick; it is how the product is priced. But it means the honest answer to “what is my deductible” on a sewer backup is not the number on the front of the policy schedule.

Questions worth having answered in writing, before a loss:

1. What is the policy deductible?
2. Is there a separate deductible for sewer backup? For overland water?
3. Are any of them expressed as a percentage rather than a fixed amount?
4. If two perils operate on the same night, do two deductibles apply?
5. Is there a separate limit on any of these covers, as well as a deductible?

This site publishes none of those figures, for anybody, because they are set per policy and we have measured none of them. That is a deliberate omission and it is listed among the things we have not measured on our methodology page.

Why the small claim is a genuine decision

For a modest appliance leak the arithmetic frequently says do not claim, and it is worth doing the sum deliberately rather than by reflex.

Consider: the repair cost, minus the deductible, is what you actually recover. Against that sits the effect on your record and your renewal, which this site cannot quantify for you and your broker can discuss.

The reason this page will not give you a threshold is the same reason it will not give you a national average cost: nobody has measured it, and a made-up threshold is worse than no threshold. What we can do is point at the one real installed price in this vertical, because a city published it: Hamilton's pre-qualified contractors charge $1,292 to $1,562 plus HST for an assessment and a mainline backwater valve, across five pre-qualified contractors for an assessment and a mainline backwater valve, plus a $291 permit.

Five firms, one city, one device — a small sample, and we say so rather than calling it a Canadian average.

Where restoration estimates and insurer estimates diverge

Most disputes on a water claim are not about whether something is covered. They are about scope, and scope on a water loss is mostly a question of category and of how far the water went.

Two specific places it goes wrong:

The category. Whether the water is Category 1, 2 or 3 under ANSI/IICRC S500 decides whether porous materials are dried in place or removed. That is the largest single line in the difference between a modest estimate and a large one. The standard calls that decision a “process performed by the restorer to establish the category of water for the purpose of establishing a scope of work” — a judgement somebody makes after an inspection, which means it can be explained and, if necessary, questioned.

Storm water treated as automatically contaminated. This one has a published answer. In March 2026 the consensus body that maintains the standard issued a position statement: “Top-down water ingress, wind-driven rain and water from weather related events are not automatically considered Category 3 Water”.

If a roof leak scope came back written as Category 3 with no contamination finding behind it, that document is the one to produce. It is published by the body that writes the standard the estimate is built on.

The question we could not source

A page about how claims get paid ought to cover how the cheque is made out, and on larger Canadian losses there is a widely-described practice of a mortgage lender being named on the settlement alongside the homeowner, with funds released in stages against completed work.

We could not verify that from a primary source we were willing to put our name to, so this site does not state it as fact and does not publish any figure attached to it. What we can tell you is that it is a specific, answerable question, and the two people who can answer it are your insurer and your mortgage lender:

• Will my lender be named on the settlement, and above what amount?
• If so, how are funds released — in stages, against inspections, or on completion?
• What does the restorer need to be paid in the meantime, and who carries that gap?

Publishing an unsourced answer would have been easy and it is exactly what the rest of this category does. Our methodology page lists everything else we have deliberately left blank for the same reason.

Questions people actually ask

Where to read next

• The full claim sequence
• What you must do before any of this
• What the work costs, and whose figures those are
• All cover types, side by side