Update:
There has been recent speculation that some real estate transactions in the Mission area may be stalled because buyers are unable to get home insurance due to the property’s proximity to a wildfire north of Agassiz, east of Harrison Hot Springs.
Insurance brokers use a rule of thumb whereby properties within a 50 km (31 mile) radius of an active wildfire are not sold fire insurance. Preexisting insurance policies are honoured. Some insurers will provide modified insurance during active risks such as wildfires.
For instance, according to BCAA’s website, “If you have arranged your mortgage with Integris, [there] may have a temporary solution for arranging fire insurance for you during the BC wildfire event regardless of your location. Policies can cover the dwelling, but does not extend to contents. Once things are back to normal, [the insurer] can then look at placing a more traditional and broader insurance program on your behalf.”
Integris Credit Union, headquartered in Prince George, has warned customers in a blog post: “Each Insurance company that we deal with has their own defined restrictions about whether we can arrange insurance in certain zones, but generally if your property is in imminent threat, we will likely be prevented from arranging any new coverage.”
In a CBC web article, Steve Kee with the Insurance Bureau of Canada was quoted the following:
“It’s not impossible to start a new insurance policy when your home is on the edge of a wildfire emergency, but it can be difficult. They’re going to look at how far away are you from a fire department or a hydrant … they’re going to look at how your property was built … the location, that kind of thing. This will all go into how they determine the risk factor for your property.”
The Real Estate Council has also posted useful tips for REALTORS® dealing with this issue: BC Wildfires: What You Need To Know.
From BCREA…
As of August 6, more than 300 active fires were burning throughout BC, with evacuation orders and alerts impacting hundreds of properties. From a real estate practice perspective, it’s important for REALTORS® to know what their clients should expect with regard to home insurance for those living in areas affected by wildfire.
First of all, existing insurance policies and renewals aren’t affected.
Second, insurance is for unforeseen events. So, when a client’s home is in an area under evacuation alert or order, it’s fair to expect that new insurance policies are unlikely to be approved until the threat eases. Some insurers may also restrict new policies based on proximity to fires, even when no evacuation orders or alerts are declared. Changes to existing insurance policies, such as requested increases to coverage limits, may also be declined.
Third, 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 can REALTORS® do?
- Buyers who have trouble obtaining insurance should be encouraged to contact several insurance providers, because they have different approaches and criteria.
- Where buyers aren’t able to obtain insurance, they should seek legal advice.
- REALTORS® can help protect homebuyers by using the Subject to Fire/Property Insurance clause developed by the Real Estate Council of BC:
“This offer is subject to the Buyer obtaining approval for fire/property insurance, on terms and at rates, satisfactory to the Buyer, on or before (date). This condition is for the sole benefit of the Buyer.”
- Brokers may also wish to contact their company solicitors for guidance as to how they should deal with this issue.
Additional resources
- FireSmart Manual from the BC Wildfire Service: www.bcwildfire.ca/Prevention/firesmart.htm.
- Tips and information about fire safety from the Insurance Bureau of Canada: www.ibc.ca/bc/disaster/fire.
- Information on evacuation orders and alerts from EmergencyInfoBC: www.emergencyinfobc.gov.bc.ca.
- To find out the status of wildfires in B.C., go to BC Wildfire Situation. To find out about road closures due to wild fires, visit the interactive map under Conditions and Events on the provincial highways website: www.drivebc.ca. Follow the Twitter hashtag #BCWildfire for more information
- For those who would like to help the victims of the BC wildfires, the Canadian Red Cross is accepting donations. You can text FIRES to 45678 to donate $10 to the Canadian Red Cross BC Fires Appeal. The money will go to providing financial assistance, cots, blankets, and family reunification services for victims of the fires.