IBC: Wildfires in B.C. shouldn’t hike home premiums
Even with wildfires nearby, insurers should renew
Despite British Columbia’s own woes with wildfire, for the most part, brokers and homeowners don’t have to worry about rate increases or policies being denied.
“Insurers don’t cancel policies due to wildfire threats,” says IBC spokesperson Aaron Sutherland. “So if you’re living in an area where there’s a wildfire nearby, even if you’ve got to renew, insurers will renew.”
The caveat to this scenario, he adds, is if someone is trying to buy a new home policy or to add risks to a current policy with a wildfire burning nearby.
“Insurers do undertake a suspension of binding authority for new policies for new clients in areas where there’s an active wildfire,” he says, noting that insurers may use an evacuation order or other metrics to decide when to suspend binding authority.
Those who are in the process of buying a new home when a wildfire springs up nearby may not be able to get insurance for that property, but their purchase agreement should have conditions that allow them to walk away.
Home insurance in B.C. remains unchanged despite the increased incidence of wildfires because the blazes have caused relatively few property losses, which Sutherland attributes to good preparation, dedicated firefighters and a good deal of dumb luck.
“Some of it has to do with a lot of municipalities doing things like interface field reduction programs… getting rid of a lot of fuel around the communities,” says Sam Cowan, partner and vice-president of sales and marketing at RHC Insurance in Nelson, B.C. “And a lot of local communities are close to water as well. So it bodes well when it comes to interface fires. But most of all, it has to do with luck.”
That luck ran out last year for some people in B.C.’s southern interior. In August 2015, a human-caused wildfire near the community of Rock Creek burned through 300,000 hectares and destroyed 30 homes. Cowan, who has some clients in the area, says that some of the people who lost their homes in that blaze had no insurance at all.
That’s because many homeowners considered coverage for remote rural areas without fire protection services to be too expensive. But, Cowan says, those property taxes tend to be reduced enough to compensate for the higher premiums.
The higher cost of insurance in unprotected rural areas should be seen less as a burden and more as an indicator of the risk homeowners face, Sutherland says.
Copyright © 2016 Transcontinental Media G.P. This article first appeared in the May 2016 edition of Canadian Insurance Top Broker magazine