Canadian Underwriter

Canadians evacuated from homes after a wildfire can expect to suffer $11,300 in financial losses: Square One Insurance

July 6, 2017   by Canadian Underwriter

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Canadians evacuated from their homes because of wildfires can expect to suffer an average of $11,300 in financial losses, a recent study from Square One Insurance Services Inc. has found.

FILE – Burned out houses are shown in the Abasands neighbourhood during a media tour of the fire-damaged city of Fort McMurray, Alta., in a May 9, 2016, file photo. Severe weather events such as fires and floods are becoming more frequent and more difficult to predict, and it’s forcing architects and engineers to rethink how they design buildings, infrastructure and cities. THE CANADIAN PRESS/Jonathan Hayward, File

Those with home insurance can recover most, but not all, of the financial loss, Square One said in a press release on Thursday.

There have already been 1,700 wildfires across Canada during the first six months of 2017, the company reported. The province with the most wildfires is Alberta, accounting for 37% of the national total, followed by British Columbia with 16% and Quebec with 8%.

“There’s a lot of information available on wildfire prevention and preparedness,” said Square One president Daniel Mirkovic in the release. “But, there’s surprisingly very little information on what financial losses people suffer from wildfires. That’s why we’ve decided to share our findings from the Fort McMurray wildfire in 2016.”

The internal study was completed on June 30.

Residents who were affected by wildfires generally fall into two categories. The first includes those who suffered direct fire loss to their homes and belongings; the second includes those who suffered indirect fire loss, like smoke or ash damage, to their homes and belongings.

In reviewing the Fort McMurray wildfire, Square One found the following:

  • Even if flames don’t reach a home, homeowners are still at risk of suffering a large claim: Residents who suffered indirect losses reported claims averaging $11,300. Indirect fire loss typically results from smoke entering the home, ash settling in the home and food becoming spoiled during power outages. Indirect fire losses also include additional living expenses, which are the increased costs incurred while residents are forced to live outside their home. The average cost for additional living expenses was $2,800. Since fire is an insured peril under all policies, those with home insurance were able to recover most of their financial losses. The average deductible for Square One policyholders was $1,700;
  • Spoiled and contaminated food was the most common type of property loss: Every claim submitted by residents affected by the Fort McMurray wildfire included spoiled and contaminated food, according to Square One. “This isn’t surprising since there were extended power outages,” the release said. “Even homes that didn’t experience power outages suffered this type of property damage. That’s because non-refrigerated food was contaminated by smoke or ash.”;
  • Smoke and ash damage was the second most common type of property loss: 54% of Square One claims included loss or damage to clothing, furniture, drapes, and carpets caused by smoke and ash. Without proper cleaning and remediation, the smell can linger for months, the company said;
  • In the event of an evacuation, prepare to be away from the home for weeks: A mandatory mass evacuation order will cause a person to live away from home and prevent the homeowner from returning for several weeks, sometimes months. Evacuation orders can last well after the main fire has been controlled for several reasons, including additional smaller fires, air quality, dangerous debris and delays in restoring critical services, like hospitals.

“And, it’s important to note that claims processing times during natural disasters can vary,” the release added. “That means you will likely still be in the claims process even after the mandatory evacuation order has been lifted and you’re allowed to return home.”

Square One pointed to the FireSmart program for steps in helping to prepare the home and its surrounding area against wildfire damage. The first step is to create a protection zone around the home, the release said. If possible, ensure the area within 10 metres of the home is free of trees, flammable vegetation and other combustibles including woodpiles or garbage. Removing tree branches that are up to two metres from the ground will help stop wildfires from reaching the tree tops, the release added. If possible, try to keep the tops of the trees on the property at least three meters away from each other. If the fire reaches the top of the trees, the distance between them may stop the fire from spreading. FireSmart also “highly recommends” keeping grass mowed short and well-watered, Square One noted.

Another step is to use fireproof materials in the construction of the home. This could include fire-resistant roofing and siding materials, tempered glass windows and a spark arrestor on the chimney. Taking these steps may even reduce your home insurance rate, Square One said.

With wildfires occurring more often, the insurance company also explained what should be done during the alert period and the actual evacuation:

  • During the alert period: The alert period is when officials alert residents that they should be ready to evacuate at a moment’s notice. Homeowners should pack suitcases with toiletries, medications, seven days’ worth of clothing and shoes and all important documents and contact information. Leave these suitcases at the front door so that they’re ready to go and keep them in a vehicle when travelling. During the Fort McMurray wildfire, some residents were not able to return home once the evacuation was ordered.
  • During the evacuation: The most important thing during the evacuation period is to follow the directions of the authorities. For example, returning home might sound safe, but the authorities may provide additional information that would make returning home dangerous. Residents should also use social media to obtain near real-time updates, check in to an official evacuation center and contact their home insurance provider. They can explain the claims process and review what coverage a policy provides, as well as any limits of insurance and deductibles that apply.

Established in 2011, Square One offers the “only home insurance policy in North America that can be personalized to your unique needs,” the release said. Square One is also one of the few providers to automatically include sewer backup and broad water protection in its policies. The company currently serves British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Arizona.

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