There’s still no access to the fire-ravaged city of Fort McMurray, but displaced residents – some of whom fled directly from the flames – are now learning what they’re covered for in a worst-case scenario. However, the question remains – will homeowners choose to move back into the city once they have their insurance cheques in hand?
Economic conditions have been rocky in the oil sands-dependent region as commodity prices have plunged, leading to mass industry layoffs and a steep downturn in real estate prices. It is possible former residents will choose a cash payout rather than undergo the rebuilding – and potential sale – of their homes, according to Paul MacDonald, vice president of claims at RSA.
Fortunately for evacuees, damage due to fire is covered in comprehensive home insurance policies - unlike the lack of overland flooding coverage many were surprised to learn they did not have during the mass floods that hit southern Alberta in 2013.
And, because the city was emptied due to a mandatory evacuation, residents are covered for incidental costs as well – a main area of focus for carriers and brokers at this early stage, says MacDonald.
“The most important things at this time are what we call additional living expenses, that the customers will incur from having to rent hotel rooms, having to get groceries, the fundamentals, as well as something called ‘loss of the use of vehicle’,” he says. “We’re being told that many of the customers left their vehicles behind and obviously if they’ll need some mode of transportation where they are.”
He added that now that residents have been effectively moved to safety, concern immediately shifts to what their coverage includes – a challenge when they can’t access their records.
“Fires are particularly problematic, because if you’re evacuated from your building and all your insurance contracts are in your house, obviously you can’t sit and review the contracts to determine what’s covered,” he says. “It is typically quite a panicked situation for customers, so this is about calmly explaining what the options are, trying to put some certainty around what to expect from the process.”
“They’re looking for information. They need money to help them bridge the gap and they start calling a variety of different insurance companies.”
Total damage from the fires has been forecasted to hit more than $9 billion, in what is the costliest environmental disaster in Canadian history.
“It’s an evolving situation and we’re still very much in early days,” says MacDonald. “As this progresses, there will be far more support in this area, once it stabilizes.”