08/18/2021
This month I want to make sure ALL are aware that if you are purchasing an investment property in the Interior near a wildfire, there are some serious conditions needed to prepare yourself!
Home insurance and wildfire season: What you need to know
BC’s wildfire season is devastating communities across our province this year with nearly 270 fires burning right now.
During this crisis, it’s important to understand what you should expect from their insurance.
What to expect
Trying to obtain fire insurance can be difficult in areas under the threat of wildfires.
While insurance underwriters follow their own companies’ guidelines, expect that where evacuation orders or alerts exist, it’s unlikely insurance providers will approve new policies until the threat eases.
Some companies may also restrict new policies based on proximity to fires, even when no evacuation orders or alerts have been declared. Providers may also decline changes to existing insurance policies, such as requested increases to coverage limits.
As well, insurance for properties in unprotected fire districts is more expensive than in protected fire districts. An unprotected fire district is an area without fire hydrants and a fire department.
What you can do to help
Insurance doesn’t just affect your peace of mind—it can also affect your mortgage. For example, if your insurance company withdraws their approval for a property, your lender may also withdraw their mortgage approval.
Here’s what you can do to mitigate this risk around insurance:
Contact their insurance broker and discuss whether their upcoming purchase will be affected by wildfires, and if so, what their options are.
Contact several insurance providers. Different providers may have different approaches and criteria.
Get legal advice in areas where you are unable to obtain insurance.
Use the following Subject to Fire/Property Insurance clause developed by BC Financial Services Authority (BCFSA), our provincial regulator:
Subject to the Buyer obtaining approval, on or before (date), from a licensed insurer for property (including fire) and liability insurance for the Property on terms and at rates satisfactory to the Buyer. This condition is for the sole benefit of the Buyer.
Brokers may also contact their company’s solicitors for guidance on how to deal with the issue.
Resources
BC Wildfire Service’s FireSmart recommendations
FireSmart Canada’s FireSmart Begins at Home manual
Tips and information about fire safety from Insurance Bureau of Canada
BCFSA’s Information Regarding BC Wildfires
BC Wildfire Dashboard
