2023 Wildfire Season FAQ

We’re here to support our policyholders and communities during these very challenging times. If your home, car or business was damaged as a result of a wildfire, here is some information to help you understand your insurance coverage and the various stages of the claims process.

Wildfire Insurance Q&A

Frequently Asked Questions

All standard homeowner’s and tenant’s insurance policies cover damage caused by fire. They also include mass evacuation coverages to help with the cost of alternative accommodations and living expenses for people who are prohibited from returning home due to a mandatory evacuation order or because their home is unlivable as a result of insured damage.

Comprehensive or “all perils” auto insurance policies cover your vehicle for fire damage. While most drivers have this coverage, it is not mandatory, so make sure to check your policy.

If you know who your insurance representative is, contact them as soon as it is safe to do so. Otherwise, call your insurance company. If you need any assistance, contact IBC’s Consumer Information Centre at 1-844-2ask-IBC (1-844-227-5422) or email AtlanticCIC@ibc.ca (Atlantic region), AskIBCWest@ibc.ca (Western & Pacific regions).

When you report a loss to your insurance representative, you will be assigned a claims adjuster. It could take some time for the claims adjuster to contact you, given the number of claims in Nova Scotia and New Brunswick. But rest assured that you will be contacted. Making sure that your insurance representative has your correct email address and cellphone number will help the claims adjuster reach you.

The claims adjuster will investigate the circumstances of the loss, examine the documents you provide and explain the claims process. Take notes during these conversations, including whom you spoke with and what date, and speak up if you have questions.

Your insurance company will ask you to complete a “Proof of Loss” form to list the property and/ or items that have been damaged or destroyed and the value or cost of the damaged or lost items. You will be asked to sign and swear that the statements you make on this form are true.

If you have any concerns or are uncertain about any aspect of your policy or claim, don’t hesitate to ask your insurance representative or claims adjuster. They are there to help.

Yes. Any government financial assistance for evacuees is in addition to your insurance policy claim. You do not have to choose one or the other. If you are eligible for the government evacuee payment, you can apply. This will not impact your insurance coverage, or limits for your insurance claim. These payments are separate.

An insurance policy is a contract that has terms, conditions, limits and commonly a deductible. A deductible typically applies to a claim, but in some circumstances, it may not apply to certain portions of coverage. A deductible is usually paid to a contractor, who is completing the repairs to your property, or your deductible would be deducted from any payment that is being provided to you. You do not have to send a cheque to your insurance company directly for your deductible. Check with your adjuster if or when your deductible applies.

As much as prior claims can impact future premiums, the insurance industry is well capitalized for these events. A single wildfire event typically does not automatically impact premiums. There are external factors that are putting pressure on premiums however, like inflation, interest rates, supply chain disruptions and skilled labor shortages. The insurance industry works hard to ensure premiums remain stable. Remember that you can customize your insurance policy to fit your needs and speak to your insurance representative about options that are available.

No. A landlord insures only the building and in some cases the appliances. The personal property of tenants is theirs to insure on their own.

Contrary to popular belief, there is no such thing as an “act of God” exclusion in any property insurance policy in Canada. Insurers often pay for damage resulting from natural disasters, including windstorms, rain, hail and wildfires.

No. The main reason for getting the claims process started as soon as you can is so you can be reimbursed as soon as possible.

Generally, claims related to the damage of personal insured property that is insured must be reported within two years from becoming aware of the damage or loss. For business property claims, owners should speak with their insurance representative.

Yes, your home and business insurance policy will cover damage from fire, regardless of the source or cause of the fire, unless you caused the fire intentionally.

After fire damage, you should not enter your home until emergency officials say it is safe to do so. Don’t turn on any electrical switches until the electrical system has been checked by a professional.

Once authorities say it’s safe to begin cleanup, take all of the proper precautions to protect yourself. Your adjuster may advise that you to use a professional cleaning service if the damage is extensive.

Your coverage depends on your policy. Check with your insurance representative.

Typically, a homeowner’s policy offers replacement cost coverage up to the limit specified in the policy. Or, if a policy is for guaranteed replacement cost coverage, the insurer pays whatever it costs to repair or replace your dwelling and other structures, even if it exceeds the policy limits. Most policies contain a “same site” requirement for guaranteed replacement cost coverage that requires that the home must be rebuilt where it was.

Residents who return home following evacuations, or anyone with an insured home or business, may find that their property has been affected by fire retardant used in wildfire suppression.

Most homeowner’s and business insurance policies will cover the costs related to the removal of fire retardant from the exterior of buildings. Please contact your insurance company representative to determine the exact nature of your coverage.

Typically, if the home is not rebuilt on the site where it was before the loss, your policy would cover you for your home’s actual cash value (depreciated value). Check your policy for details.

Your policy insures your home, other structures and personal property, such as furniture and electronics (plus any extensions and your personal liability). It does not insure the land. If you decide to take a cash settlement, you still own the land.

If there is a mortgage lender listed on your policy, such as a bank, the lender is entitled to the outstanding mortgage amount for the home. Lenders are protected under a Standard Mortgage Clause in your policy.

If, for example, the home is totally destroyed and the policy has a $450,000 limit and there was an outstanding mortgage debt of $450,000, the bank would get the $450,000. But if the property was insured for only $350,000 and $450,000 was owed on the mortgage, the bank would get the $350,000 and the homeowner would owe the $100,000 balance of the mortgage to the bank. Of course, the land is still the homeowner’s to sell.

  • The intent of insurance is to help people recover from the unexpected property losses. It is not intended to cover mortgage payments after a loss or to cover an outstanding mortgage on a home.
  • Home insurance is designed to cover the costs associated with rebuilding a home and the costs of replacing its contents.
  • Homeowners whose dwellings have been destroyed by fire will still owe their lender the outstanding balance on their mortgage.
  • The insurer will make the claims payment jointly in the name(s) of the insured(s) and the mortgage lender.
  • If the homeowner chooses to rebuild the home on the same site, the limit of insurance or full replacement cost applies. Any outstanding mortgage would continue to be in place, and the homeowner would be effectively returned to the same financial position that they were in prior to the catastrophe.

Insurance is intended to put you back in the position you were in prior to the loss. Alternatively, home insurance policies can provide cash settlements. There are financial implications associated with accepting a cash settlement. Policyholders considering cash settlements should weigh the financial aspects carefully to make the best choice.

In the event of a catastrophic event, such as a wildfire that destroys their home, an insured homeowner has the option of:

  • Rebuilding the home on the same site, or
  • Taking the depreciated actual cash value (ACV) of the home which they might use to build or buy a home elsewhere.

There are several factors to consider when choosing whether or not to accept a cash settlement, such as:

  • The full replacement cost of the home versus its depreciated ACV;
  • The outstanding value of a mortgage on the property, if any; and
  • The market value of the home and land.

If the homeowner chooses to take the ACV of the home and rebuild or invest those funds elsewhere, the homeowner also needs to consider the amount of any outstanding mortgage.

  • If there is an outstanding mortgage on the property, then lenders, such as your financial institution, are protected under the Standard Mortgage Clause. If there is a mortgage lender listed on a home insurance policy, the mortgage lender is entitled to recover from the insurer up to the outstanding mortgage amount.
  • In a situation where a property was insured for less than the outstanding mortgage balance, the homeowner would still owe the balance. Of course, the land where the home stood still belongs to the homeowner and can be sold to help pay off the outstanding mortgage.

The decision by an insured homeowner to take the ACV of the home instead of rebuilding on the same site is a personal financial decision. Speak to your insurance representative to ensure you understand the settlement you have selected.

No. If a “State of Emergency” is declared by the province, only areas that are under imminent threat are commonly subject to temporary restrictions or limitations on the sale of new insurance coverage.

It is important to note that renewals of insurance policies are not affected by the wildfires.

  • Consider adding a conditional ‘subject to property insurance’ clause in the offer
  • See if you can delay the possession date, until the threat passes and coverage can be placed on the policy
  • Shop around. Different insurers have different limitations and/or restrictions for properties in threatened areas
  • Ask your broker or agent what options may be available to secure insurance for the home
  • Ask if you can add the new home to your existing policy instead of trying to secure a new insurance policy with a different provider.

If you are in the process of selling a home, do not cancel coverage until the closing or possession date.

Yes. Such coverage is available through most home insurers, as well as specialty insurers. This includes coverage for fires.

One thing to keep in mind is that when setting premiums for property coverage, insurers consider the availability of and distance from public fire protection such as fire services and firefighting water sources. More remote properties are generally more costly to insure.

Many insurers have established relationships with fire and smoke remediation contractors and can vouch for their reliability and the quality of their work. Many insurers also guarantee the work of service providers they recommend. However, you are not obligated to use a company recommended by your insurer. You can use the service provider of your choice for the necessary repairs to your property.

Yes. Your home or tenant insurance policy continues to be in force, while you are temporarily evacuated. Even insurance renewals commonly take place during a major wildfire event. Most home and tenant insurance policies cover damage from vandalism or theft, so rest assured your insurance company will assist you if you return home and find damage to your property.

Business Specific FAQs

Business insurance policies can differ significantly. However, virtually all business insurance policies cover damage due to wildfire.

Property insurance for businesses is designed to protect the physical assets of a business against loss and/or damage from a broad range of causes. There are two basic policy types:

  1. Named perils – covers only loss and/or damage caused by perils specifically listed in the policy. Loss and/or damage caused by any other peril is not covered.
  2. Comprehensive – covers loss and/or damage caused by any peril, unless specifically excluded.

BI coverage is typically an add-on to an existing business property insurance policy. In the event of a business temporarily needing to shut down, BI covers continuing expenses or replaces lost profits.

There are three types of BI policies:

  1. Gross earnings policy, which pays only until property or damage is replaced or repaired, or stock is replaced
  2. Profits form policy, which continues to pay until a business resumes its normal, pre-interruption level (subject to policy limits)
  3. Extra expense policy, which is designed for businesses that can remain operational during periods affected by loss and/or damage.

BI policies are not standardized and can include significant differences in terms, conditions and scope of coverage , but most contain language indicating that the insurer will pay for the actual loss of “business income” due to the “necessary suspension” of operations during “the period of restoration.”

A number of concepts and nuances come into play, including:

  • Physical damage requirement: Most policies require proof that the insured premises sustained physical damage (for example from fire, heat, flooding or firefighting efforts) that is covered under the policy, causing an interruption that resulted in a loss of business income. A business that is interrupted due to the loss of data or a loss of utilities may not have sustained a physical loss. (There is separate utility loss coverage.) Smoke damage could likely qualify as physical damage caused by a covered loss. Most policies would require proof that the presence of ash and smoke resulted in a BI that caused a loss of income.
  • Period of restoration: If BI coverage is triggered, a significant issue is defining the period of indemnity or, as some policies refer to it, the period of restoration. Most policies will pay business income loss, subject to potential limits and conditions, through to the point that the business is restored or when the coverage expires (usually 12 months from the beginning of the interruption).

A business that lost income solely because access was denied due to a mandatory evacuation order may be able to claim civil authority coverage, which is separate and apart from BI coverage. If civil authority coverage is available, it will typically be offered if an insured affected by a mandatory evacuation can establish the:

  • Issuance of the qualifying order and that it prohibited access to the covered premises; and
  • The order caused a business loss.

Some policies state that the coverage applies only if the order is issued with respect to adjacent property or property within a certain geographical radius of an insured location. Some policies state that the indemnity period begins 72 hours after the issuance of the order and extends for a period of weeks (usually three or four weeks) but seldom for a period beyond that. The coverage terminates when the civil authority lifts its evacuation order or the limits have been exhausted – whichever comes first.

Generally a reduction in customers related to an insurable disruption which results in reduced profits would be covered under a BI policy, subject to the terms of the policy.

Additionally, the BC wildfires may have disrupted the supply chains of businesses outside of the fire zone. Some businesses may have contingent BI coverage (CBI), or “dependent business coverage” for economic losses caused by property damage to a supplier’s premises or for a supplier shutdown due to an evacuation order.

The indemnity period is the time period covered for loss of business. There are two basic forms of BI indemnities:

  1. Limited (or earnings). This policy pays only until the damage is repaired or the property is replaced. As soon as the business resumes, the policy stops paying even if the business hasn’t regained its previous level of earnings.
  2. Extended (or profits). This coverage continues to pay until a business resumes its normal, pre-interruption level subject to the maximum period of indemnity listed in the policy.

Resources:

Insurance during wildfires

During major weather events, insurance companies may initiate temporary limitations on the sale of new policies in areas under imminent threat. Only those in areas that are under imminent threat are commonly subject to temporary restrictions or limitations on the sale of new coverage.

Consumers who want to change their coverage levels during such events may face difficulties. However, renewals of existing policies will continue to take place, regardless of the windstorm threat. Many policies include a ‘Declaration of Emergency Endorsement’, which can extend the expiration date of policies when an emergency is declared by government, and your insurer or insurance representative cannot provide your renewal. This ensures that the existing policy stays in force, typically for an additional 120 days. The purpose of insurance is to protect you from unforeseen events. It is important to have coverage year-round, and not wait for events to occur before trying to secure insurance protection for your home and property.

Some examples of the limitations/restrictions that may be put in place for areas facing a threat from a weather event include:

  • new policies
  • deductible changes
  • alterations to insured limits
  • major changes to existing policies

Since these restrictions are temporary, they do ease as the threat decreases.

Filing an insurance claim

Understanding how to file a claim before you need to can help reduce the stress in the aftermath of damage or loss.

Home insurance claims

When it’s safe to do so, make a complete list of all damaged, destroyed or lost items. Remember these tips:

  • If possible, attach proofs of purchase, receipts, police reports, owner’s manuals and warranties for lost or damaged items.
  • Take photos of any damaged or destroyed items. Review your files for photos of any lost items.
  • Keep notes and be as detailed as possible when documenting damage and providing information.
  • Keep ruined items unless they are dangerous or pose a health hazard.
  • Keep all receipts related to cleanup.
  • Review and update your home inventory list after you experience a loss.

While you legally have two years from the date of the incident, it’s recommended that you report an accident or claim to your insurance representative and provide complete, accurate details as soon as possible following a theft, accident or property damage. Most insurance companies have a 24-hour claims service.

Here are some things to keep in mind:

  • Always keep your insurer’s contact information handy.
  • Be as detailed as possible regarding the circumstances of the loss and any subsequent damage.
  • In the event your home is unfit to live in, ask your insurer about the Additional Living Expenses (ALE) that are covered under your policy and what the limit is.
  • Most personal property insurance policies (homeowner, condominium unit owner and tenant) cover the cost of alternate accommodations and living expenses for people whose home has become unliveable after an insured loss. There may also be limited coverage for mass evacuation under certain circumstances. This is typically called Coverage D – Additional Living Expenses or ALE in an insurance policy.
  • ALE covers anything over and above your normal expenses. For example, if your temporary accommodations doesn’t have laundry facilities and you have to use a laundromat, those expenses may also qualify. However, ALE does not cover all of your living expenses while you are displaced; it covers your increased cost of living as a result of being displaced.
  • Keep all receipts and invoices for additional living expenses following your loss.
  • Remember that your insurance representative is your advocate when bad things happen.
  • After filing your claim with your insurance representative or directly with your Insurer, a claims specialist or adjuster will contact you. They will investigate the loss circumstances, examine the documents you provide and explain the next steps.

When you file your claim, your insurance company will ask you to complete a “proof of loss” form. This form lists all damaged or lost property or items with the value or cost of the damage or loss.

You must sign and swear the statements you make are true. If any of the statements are untrue, your insurance may be voided.

Typically, a proof of loss must be completed and returned to your insurance company within 30 days. Your insurance representative or claims adjuster can answer any specific questions you might have.

Auto insurance claims

Things can change rapidly and unexpectedly in the aftermath of a collision or if your car has been damaged. This is why taking photos and making a detailed record at the scene of an event is so important.

Once it’s safe to do so at the site of a collision you and any other driver(s) involved should both take photos and immediately document:

  • date, time and specific location where the event occurred
  • drivers’ names, addresses, phone numbers, drivers’ license numbers, vehicle registration and insurance information
  • contact information for anyone who is injured or potentially injured, involved in the incident or a witness
  • all details about any injuries, potential injuries or property damage
  • specific information about the collision or incident – how it happened, speed, weather and road conditions and anything else you think may be important
  • if witnesses are available, their description(s) of the collision or incident – what happened before, during and immediately after
  • if a police officer attends the scene, note their name and badge number

With the appropriate coverage in place, your insurance provider will support you in a number of ways.

  • They’ll authorize repairs to your vehicle if it is damaged and repairable. Your insurer may suggest repairs be carried out by their preferred shop(s) to ensure they can confirm the quality of the work.
  • If damage is major and cannot be repaired safely, or the cost of repairs is more than the value of your car before it was damaged, your insurer may declare it a “total loss”. This means the car will not be repaired and your insurer will provide you with a settlement.
  • If you’re injured, you may be entitled to benefits. They’ll provide claim forms for accident benefits and help you through the process.

Additional living expenses

Most personal property insurance policies (homeowner, condominium unit owner and tenant) cover the cost of alternate accommodations and living expenses for people whose home has become unliveable after an insured loss. There may also be limited coverage for mass evacuation under certain circumstances.

This is typically called Additional Living Expenses or ALE in an insurance policy. The categories of ALE claims include:

  • Prohibited access because a civil authority has ordered a mass evacuation. This coverage starts on the date of evacuation and typically expires after a specified number of days. Policyholders should check their own policies for limits.
  • Prohibited access as a direct result of damage to neighbouring premises. This covers a policyholder whose home may not have been damaged but who cannot return because of damage to homes nearby. Policyholders should check their policies or ask their insurance representative to confirm their limit. Insurers will review the duration of coverage on a case-by-case basis.
  • Damage to your home by an insured peril, for example fire, flood or related damage. This covers a policyholder whose home is unlivable because of damage by an insured peril. Typically this covers additional living expenses for a reasonable amount of time needed to repair or rebuild the home or until the policy limit is reached. In a flood situation, policyholders who have purchased optional sewer backup coverage or optional overland flood insurance would have this coverage. Always check with your insurance representative to understand the limits of your coverage.
Additional living expenses FAQs

When an evacuation order is lifted, prohibited access coverage ends. If your home is not damaged and the governing authority has given an all clear to return but you choose not to, you will not be eligible for further ALE. If there are extenuating circumstances, you should contact your insurer.

With the appropriate coverage in place, your insurance provider will support you in a number of ways.

  • They’ll authorize repairs to your vehicle if it is damaged and repairable. Your insurer may suggest repairs be carried out by their preferred shop(s) to ensure they can confirm the quality of the work.
  • If damage is major and cannot be repaired safely, or the cost of repairs is more than the value of your car before it was damaged, your insurer may declare it a “total loss”. This means the car will not be repaired and your insurer will provide you with a settlement.
  • If you’re injured, you may be entitled to benefits. They’ll provide claim forms for accident benefits and help you through the process.

Reimbursement periods vary from insurer to insurer; however, insurance companies understand that homeowners need to pay their expenses. Keep all your receipts and speak with your adjuster about what to expect regarding the timing and frequency of reimbursement. In some instances, your insurer may even provide an advance on ALE.

ALE covers the increased cost of living as a result of being displaced, such as hotel accommodations and anything else over and above normal living expenses. For example, if your temporary accommodations didn’t have a kitchen and you had to eat in restaurants, those meals expenses would be typically covered.

Food spoilage

Your freezer and its contents may be covered for spoilage caused by an accidental power interruption. Typically, in this situation, your freezer and its contents are insured for a specific amount. Check your policy.

If possible, before disposing of food from your freezer, make a list and take photos of the contents for insurance purposes.

If you suspect your freezer is contaminated by food spoilage or other damage, speak to your insurer before discarding the appliance.

The landlord is responsible for ensuring the unit is in a habitable condition. In most cases, the landlord, or the landlord’s insurance company, will pay for repairs to the unit caused by an insured peril.

There is no set period for a landlord to repair a rental unit, it depends on the extent of the damage. However, landlords should attempt to repair the unit within a reasonable time.

Tenants are responsible for their belongings. If you have tenant’s insurance, your insurer will cover any loss or damage to your personal property. Read your policy closely to see what kind of damage is covered and call your insurer with any questions.

Tenants are responsible for the cost of additional living expenses unless otherwise stated in the rental agreement. If you have tenant’s insurance, read your policy closely to see if you have coverage for additional living expenses and call your insurer with any questions.

Choosing a contractor

Many insurers have established relationships with windstorm remediation contractors and can vouch for their reliability and quality of their work. Many insurers also guarantee the work of the service providers they recommend.

You are not obligated to use a company recommended by your insurer. You can use the service provider of your choice for the necessary repairs to your property. But before signing a contract, you should speak with your insurance adjuster to find out how much of the estimate your insurer will pay.

Ensure any contractor you hire is properly licensed and insured.

Here are answers to some commonly asked questions about contractors.

Do they base their choices on pricing or on quality of work? Each insurer will have its own vetting process to decide which vendors to include on its “preferred” list. Insurers usually base their choices on a combination of several factors including reputation, experience, qualifications, quality, capabilities and size.

The first step is to talk to the contractor. The contractor will usually be willing to rectify any deficient work and make things right.

Many insurers guarantee the quality of work done by their preferred contractors. If you are using your insurer’s contractor, and speaking to the contractor doesn’t rectify the problem, your next step is to speak to the adjuster assigned by your insurer to outline your concerns. Each insurer has an internal escalation process to address these types of issues. In extreme circumstances, you may want to refer to your province’s formal dispute resolution process.

Insurance dispute resolution

If you have a complaint about your insurer or insurance professional, there are a number of actions you can take to be sure you’re heard and that your issue is resolved. Here are 4 steps to addressing an insurance dispute:

  • Ask your broker, agent, company representative or claims adjuster for an explanation. Insurance policies are legal contracts that specify the rights and responsibilities of both parties – sometimes misunderstandings can occur.
  • If you have further questions that your representative or adjuster is unable to answer, ask to speak with the claims manager or supervisor.
  • Consider contacting IBC’s Consumer Information Centre at 1-844-227-5422. Our independent staff have years of insurance experience and can answer general questions about:
    • policy wordings and coverage
    • how insurance companies handle claims
    • buying, renewing or updating insurance coverage
    • how to proceed with a complaint
  • Please note that our Consumer Information Centre is unable to provide legal advice.

All licensed insurers have their own internal dispute resolution process. Ask your insurance representative for your reinsurer’s or ombudsman’s contact information.

When you make a complaint:

  • clearly state your concern and expectations
  • have all pertinent information and documentation available
  • allow time for your insurer to investigate and answer your complaint
  • make sure you keep a record of the people you talked to and what was said

Inquiries can also be directed to the General Insurance OmbudService (GIO) at 1-877-225-0446 or giocanada.org

If your matter is not resolved with your insurer’s complaints liaison officer, request a final position letter and contact GIO. The GIO is an independent consumer dispute-resolution system for the insurance industry. Its members include most federally licensed and several provincially incorporated insurers. GIO helps you and your insurer resolve differences about claims-related matters and interpretation of policy coverage in a fair, independent and impartial environment.

If your dispute is not resolved by GIO or if your insurer is not a member of GIO, get in touch with a Superintendent of Insurance in your province.

Federal Government of Canada

Part of the role of the Financial Consumer Agency of Canada (FCAC) is to ensure that financial institutions have a complaint-handling process in place. If you have difficulty finding out about your institution’s complaint-handling process or if you’re experiencing delays when using it, contact FCAC. However, please keep in mind that FCAC does not provide redress or compensation and cannot get involved in individual disputes.

FCAC can be reached at: https://www.canada.ca/en/financial-consumer-agency/services/complaints.html or or 1-866-461-3222

By Published On: September 1, 2023Categories: Beacon
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