It’s now been more than three weeks since the massive wildfire crept into Fort McMurray in northern Alberta forcing 90,000 residents to flee their homes. The latest official damage assessment shows 2,432 homes and buildings in Fort McMurray have been destroyed and 500 damaged, including 80% of homes in the community of Beacon Hill. About 25,000 buildings are still standing but may have smoke damage.
Since the displaced residents still haven’t been allowed to return, the full extent of the damage still has to be determined. Until you look, you can’t establish the effect of the smoke and sparks on cars and other property.
Most homeowners have likely insured their houses but what exactly does the insurance policy cover? What lessons can other Canadian homeowners learn from Fort McMurray? What should they have in their policies to protect themselves?
The policies most Canadians carry cover rebuilding the same size home that was destroyed. But for many Fort McMurray residents, rebuilding in the same spot may not be desirable. They could be traumatized by the disaster or they may not have jobs to go home to when the fires have cleared. Only with a higher-priced premium policy do they have the option to rebuild their home elsewhere.
In most cases, your insurance will pick up the tab for all your living expenses until your new home is rebuilt and ready for you to move back in, including the rent you have to pay while you’re displaced. It also covers the cost of possessions you had in your home. The key is to track all expenses and keep all invoices while waiting for the rebuild.
In a media conference outlining its response after the Fort McMurray fire, the Insurance Bureau of Canada, the national industry association, explained what you can expect your insurance company to do for you:
- Virtually every home insurance policy covers damage caused by fire, even if the fire begins on a neighbouring property.
- If residents have to leave their homes because of a mandatory evacuation order issued by civil authorities, most home and tenant’s insurance policies often provide coverage for reasonable additional living expenses for a specified period of time.
- Damage to vehicles from fire is usually covered if comprehensive or all perils coverage auto insurance has been purchased. This coverage isn’t mandatory and policyholders should check their policy.
- Contrary to popular belief, there’s no such thing as an “act of God” exclusion in any property insurance policy in Canada. In fact, insurers routinely pay for damage resulting from natural disasters, including windstorms, rain, hail, or wildfire.
This is what the insurer expects you to do:
- Call your insurance representative and/or company.
- Assess and list all damaged or destroyed items. Taking photos can be helpful.
- If possible, assemble proofs of purchase, photos, receipts and warranties. Keep damaged items unless they pose a health hazard.
- Keep all of the receipts related to cleanup, and if you’ve been displaced, keep the receipts for your living expenses.
- Ask your insurance representative what living expenses you’re entitled to and for what period of time.
One thing your insurance company won’t cover is the cost of mortgage payments. You’re on the hook for making your monthly mortgage payment and paying off your mortgage yourself, just as you are for credit card payments and other bank loans.
Many of the evacuees are living in shelters way outside the city limits and they can’t work and earn a living. So what happens if they have mortgages? Are they are being forgiven, and for how long?
CIBC, one of Canada’s major lenders, says it’s trying to provide financial relief in Fort McMurray on a case-by-case basis by:
- Deferring payments on mortgages and personal loans.
- Re-amortizing mortgage payments to lower monthly costs.
- Crediting accounts for any fees caused by overdrafts, insufficient funds, and early withdrawals on term deposits or use of non-CIBC automated teller machines.
- Waiving monthly service fees and transaction fees on personal accounts.
- Deferring payments on credit cards for two months.
- Waiving fees and the monthly interest on outstanding credit card balances.
- Offering unsecured personal lines of credit and loans of up to $10,000 through CIBC’s emergency loan assistance program.
- Lifting holds on insurance cheques, provided they’re deposited in a branch.
The Canada Mortgage and Housing Corporation (CMHC) is providing relief through lenders like CIBC for CMHC-insured loans. However, mortgage loan insurance only protects lenders against mortgage default. CMHC says its insurance does not provide coverage for force majeure, or acts of god so it’s limited to claims resulting from the indirect economic consequences of the event such as a decline in property value.
The Insurance Bureau of Canada says that over the years there’s been an increase in severe weather events that have led to higher insurance payouts. Insurers used to pay out around $500 million a year in insured damages but now the number hovers around $1 billion a year. So what is in store for homeowners elsewhere in Canada? Probably higher insurance policy premiums.
There are still thousands of displaced people from the affected area looking for a new place to call home. To assist in the relocation process, the Capital Region Housing Corporation, Alberta Residential Landlord Association, the City of Edmonton, and Yardi Canada Ltd. created the Centralized Housing Registry. Here, property managers and landlords who have available rental units can add them on the platform so that Fort McMurray evacuees would be able to easily find a temporary place to call home.
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