The $563 Million Toronto Storm Number Leaves Out Pollution

CatIQ's first estimate for the storms that hit southern Ontario on September 2 and 3 is $563 million in insured losses. The figure counts commercial and residential property claims, vehicle claims and adjusting expenses. It says nothing about what the floodwater carried off those properties, because that loss is rarely insured under the policies being counted.

When a metre of water moves through an industrial yard, it lifts tanks, tips drums and pushes fuel into the nearest storm sewer. Ontario law makes the owner of that fuel responsible for the cleanup whether or not anyone was at fault. The property policy that pays for the flooded building excludes it, and so does the CGL.

What happened and what the number covers

The outbreak ran from Windsor to Ottawa and brought large hail, damaging wind, several confirmed tornadoes and torrential rain. Parts of Toronto took about 150 millimetres of rain in a few hours, roughly double a normal August. The Don River left its banks, the Don Valley Parkway closed, and Vaughan reported severe flooding. Toronto's city manager, Paul Johnson, said the rainfall met the city's definition of a 100-year storm and told residents to expect sewage impacts.

Some in the industry expected an insured loss near $1.5 billion, which would have been the largest in Ontario's history. Glenn McGillivray of the Institute for Catastrophic Loss Reduction said he could only guess at why the estimate came in lower, and pointed to basement flood coverage caps and newer separated sewers north of the city. CatIQ's Caroline Floyd said wind and hail played a larger part than in the July 2024 Toronto flood, which closed at $890 million.

Every one of those figures is a property and auto number. Spill reports, cleanup orders and claims from neighbours arrive weeks or months later, and they land on liability policies or on the business itself.

How a flood becomes a pollution claim

This scenario is an illustration. No loss like it has been reported from the September storm.

Scenario. An equipment rental company in a low-lying industrial park keeps a 4,500-litre aboveground diesel tank and a row of used oil drums behind its shop. Flash flooding puts the yard under water in under an hour. The tank floats off its cradle, the supply line shears, and most of the diesel leaves the site with the water. It enters a municipal catch basin, crosses the lot next door and reaches a creek.

Mechanism. Part X of Ontario's Environmental Protection Act treats this as a spill. Section 92 requires the person who had control of the diesel to report it to the Spills Action Centre immediately. Section 93 requires the owner of the pollutant and the person who had control of it to clean it up and restore the environment. Section 99 gives the neighbour and the municipality a right to recover their losses and costs from those same parties, and the courts have confirmed that the claimant does not have to prove fault, a duty of care or foreseeability. The neighbour has its own problem: a provincial officer can order any owner of affected property to act under section 157.1, and fault is irrelevant to that order.

Outcome. The property insurer pays for the building and contents under the flood endorsement and declines the soil and water cleanup under the pollution exclusion. If the form carries a pollutant clean-up extension, it is a small sublimit that stops at the insured's own lot line. The CGL insurer points to its pollution exclusion on the municipal invoice and the neighbour's claim. A limited pollution buy-back, where there is one, turns on a short discovery and reporting window and a sublimit that an emergency response contractor can use up in days. The rental company funds the rest from its own account while it is also trying to reopen.

Where programs fall short

The common assumption is that a storm is an act of God and that nobody is liable for what it moves. Ontario's spill regime does not work that way. A defendant can argue due diligence against a section 99 compensation claim, but the duty to clean up comes first and the regulator does not wait for that argument. In Kawartha Lakes (City) v. Ontario (Environment), 2013 ONCA 310, a few hundred litres of furnace oil leaked from a home, entered the city's storm sewers and reached Sturgeon Lake. The homeowner's insurance limit was spent within months. The province then ordered the city, which had nothing to do with the leak, to clean up its own property, and the Court of Appeal upheld what it called a no-fault order.

That case involved one basement tank in dry weather. A flood produces the same facts at dozens of sites on the same night, with the municipal storm system as the common pathway. McGillivray noted that 2026 has been a year of severe convective storm rainfall in Canada and that he expects the trend to worsen.

Flood exposure belongs in an environmental submission, and today it mostly appears only in the property one. TerrAssure asks whether tanks are anchored against flotation, whether secondary containment still works once it fills with stormwater, what is stored below grade, and how far the nearest catch basin is from the storage area. Those answers predict a pollution loss far better than a flood zone score written for buildings.

What brokers should do now

• Fleet yards, contractors and equipment dealers with fuel on site. Pull the property and CGL forms and read the pollution exclusions against a flood scenario. Quote Site Pollution Liability (SPL) with on-site and off-site cleanup and emergency response costs.
• Manufacturers and warehouses holding chemicals in flood-prone areas. Ask where product sits relative to grade and to floor drains. Check whether any pollution buy-back has a discovery or reporting window that the client could realistically meet during an evacuation.
• Commercial landlords and downstream property owners. Explain that they can be ordered to clean up contamination that arrived from someone else's site. First-party cleanup cover under an Environmental Impairment Liability (EIL) policy responds without waiting for the recovery action.
• Municipalities. Storm sewers carry other people's spills into municipal property and waterways. Review how the municipal program treats cleanup of pollutants the municipality did not release.
• Restoration and pumping contractors. Crews that pump out flooded sites are handling contaminated water and choosing where it goes. Confirm they carry Contractors Pollution Liability (CPL).

If a client took water in September, or sits where the next storm will put it, send us the property and liability wordings and a site plan showing fuel and chemical storage. Environmental liability is TerrAssure's specialty, and we will tell you where the program stops. Contact our underwriting team.

Sources

• Canadian Underwriter: Initial loss estimate for Toronto storm surprises some industry groups
• Artemis: Southern Ontario severe storm outbreak industry loss initially estimated C$563m by CatIQ
• Global News: Toronto begins recovery after 100-year storm
• Environmental Protection Act, R.S.O. 1990, c. E.19, Part X (Spills) and s. 157.1
• Government of Ontario: Report pollution and spills
• Canadian Underwriter: Ontario Court of Appeal upholds environmental cleanup order against City of Kawartha Lakes
• Lerners LLP: Section 99(2) of the Environmental Protection Act and Huang v. Fraser Hillary's Limited, 2017 ONSC 1500