With wildfires raging in British Columbia, insurers are putting property owners in a bind by refusing to cover new properties bought and built within a certain distance of a fire.
“Some agents are saying if you’re within 25 kilometres, some are saying 75, and we’ve even heard from some that even if you’re within 100 kilometres, they’re not going to issue a policy,” construction company owner Ranvir Nahal told CBC.
Companies selling insurance offer plans to cover “unforeseen risk,” but withhold coverage for any events that can be expected to happen. For many properties in B.C., “a wildfire placing an imminent threat to your property is not an unforeseeable risk,” explains Aaron Sutherland, Pacific region vice-president at the Insurance Bureau of Canada.
Nahal said such denial of insurance led to three of his projects being placed on hold this summer. That has cost him about C$500,000 per month in unbilled work—and it’s left him struggling to find labour as workers seek out more reliable employment.
Withheld insurance is affecting homeowners and buyers, too. Financed home sales often require insurance before buyers receive funds, causing some deals to be postponed.
“Many people in the real estate market might be unaware that not having insurance in place could affect their purchase or sale of a home,” writes CBC, citing Vernon-based real estate agent Saffron Quist.
Some realtors are adapting to these circumstances by including clauses in purchase agreements that allow buyers to extend the closing date if an act of nature prevents the buyer from acquiring insurance. However, an extension isn’t always possible, and can create difficulties for buyers who are required to move by a certain date to fulfill a lease agreement.
Sutherland says the problem is not likely to go away. While there are limited solutions right now, he hopes insurance companies can adapt to the new circumstances.
“As our climate changes, we’re seeing hotter, drier conditions lasting longer, and the wildfire risk is only likely to go up in this province,” he said.