The 2016 Fort McMurray wildfire was a powerful reminder for Canadians that life can turn upside down in a single afternoon. More than 2,400 homes and buildings were destroyed in a matter of days, and insurance claims exceeded $3.5 billion.
After a traumatic experience like a natural disaster, people want to get back to normal life: work, routine and the things they enjoy. However, the effects of events like these can be long-lasting, especially if your home and other assets are not properly insured.
There is an estimated 30 per cent chance of a major earthquake hitting B.C. in the next 50 years, according to Natural Resources Canada. But many homeowners aren't covered.
“Windstorm, hail, wildfires – they are all automatically included in a comprehensive homeowner’s policy, but earthquake is not,” said Linda Dolan, president of the Insurance Brokers Association of B.C. (IBABC).
A proper plan for what to do the moment calamity strikes can ensure the years ahead aren't more stressful and frustrating than they have to be. This goes beyond the immediate needs of evacuation, or having enough food and water for everyone in your household to get through the first 72 hours after a disaster.
If you do need to evacuate, knowing the location of personal identification, insurance policies, medical prescriptions, contact information, computer backups, and other documents is essential so they can be grabbed at a moment’s notice. Having cash on hand can be useful in a widespread catastrophe because debit and credit card payment systems can suffer outages. Internet service, cellphone reception and electrical power can also be interrupted.
In the long term, insurance can be the best tool you have available to stave off the lasting pain of a disaster. When an incident harms a large area, a community takes much longer to get back to normal. After all, construction crews cannot roll in and begin rebuilding the next day, says Dolan.
“When, all of a sudden, you have hundreds of homes that have been destroyed it’s another story," Dolan said.
Getting debris removed and contractors and restoration workers lined up can be difficult, simply because there may be a shortage of people able to tackle the work all at once. After a disaster, when infrastructure and day-to-day routines are disrupted, “everything takes so much longer.”
In Fort McMurray, residents’ return to their homes was delayed for about a month “because the air quality was so bad that they couldn't allow people to go there and work,” Dolan said. Air-quality specialists went in to the fire-affected areas, tested and spread tackifier, a chemical compound that suppressed air-borne contaminants.
A conversation with your insurance broker to tailor your coverage can make sure you have what you need to weather the storm. And make sure to let your broker know if you've made recent changes to your home, like adding a basement apartment or Airbnb rental suite.
If your home is not only your residence but also where you earn income, either by renting out a portion of your house, or using the space as a home office or studio, your broker cannot insure what they don’t know about. You don’t want to find out after it’s too late that an activity you thought was irrelevant has now compromised or invalidated your coverage. “That’s the last thing we want to happen,” said Dolan.
Making a claim is made much easier if you’ve created an itemized list of your belongings. It might seem tedious, but after a major loss “it’s hard to recall everything that you had,” Dolan said.
“These are things you can do for yourself now, before the disaster happens.”
After a disaster, if you’re forced to leave your home for an extended period of time, it can be overwhelming if your ability to earn income is also put at risk.
“Our big concern here in B.C. is earthquake. If you own a building and you rent it out, you can get rental income coverage. Normally for 12 months, but I usually tell clients they should extend it for 24 months,” Dolan said. “It takes a long time to get back in business,” so making sure that you have proper business interruption coverage is key.
“If you have a mortgage, you still have to pay it,” she said. Expenses don’t disappear if your ability to earn a living is put on hold.
Neither can you assume your coverage is complete if you live in a strata property. If your building’s insurance cannot completely cover needed restorations, the remaining cost could be divided among the unit holders. Loss assessment coverage prevents you from personally having to come up with money to help your building to cover the shortfall.
Dolan says many strata owners erroneously assume that the insurance policy on the strata building will cover their personal losses. That is not the case. First, the building policy must include earthquake, which is an added coverage. When initiating an earthquake claim for a strata building, the owners must pay the insurance deductible, and that money must come from the strata’s reserves or from a special levy of the owners. Since the deductible is a percentage of the appraised value of the building, it could be in the millions of dollars. A strata unit owner’s policy for their own unit, in addition to covering their personal possessions and unit upgrades, will provide some coverage for any assessments for the building deductible.
"People think insurance is cut and dried, but, really, it's anything but," Dolan said, adding that if you don’t know whether something is covered, just ask your insurance broker.
For more practical advice on how to understand the various risks to of a natural disaster in B.C. check out the online guide, REBOUND.