Forest fires can be devastating. They can damage property, endanger lives, and wreak havoc on a community. After the fire has cleared, homeowners and businesses are often left to pick up the pieces, suffering financial losses and hardship in the meantime.
Part 1: A Lawyer's Perspective
Insurance Coverage and Fire Protection for Your Home and Business
Forest fires can be devastating. They can damage property, endanger lives, and wreak havoc on a community. After the fire has cleared, homeowners and businesses are often left to pick up the pieces, suffering financial losses and hardship in the meantime.
Making sure your home or business is properly insured can help to mitigate that risk, and compensate you for those losses, if your home or business is ever damaged by a fire. When insuring your property or business, it is particularly important to be precise and proactive. Having insurance does not guarantee that you will be fully compensated, so it's important to take additional steps, including:
- Reduce the potential hazards and causes of fire. This can include work like clearing and safely storing flammable materials; using fire-resistant materials in construction; installing fire suppression systems like sprinklers; and reducing overall clutter both inside and outside the property.
- Keep your insurance up to date. If you make changes to your property or business without notifying your insurer, it is unlikely they will provide coverage for those changes – and it may even risk voiding your initial policy, depending on what was changed. If you renovate your home, add an in-law suite, or conduct any significant electrical or plumbing work, you should notify your broker or insurer first, and make sure your policy reflects the changes you have made.
- Make sure you properly disclose the use of the property. If you are insuring your home, but you run a small pottery business out of your studio in the basement, you should notify your broker or insurer of that when purchasing your insurance package. Similarly, if you run a business that is primarily wholesale, but you occasionally see individual consumers and have a front-of-house, you should disclose that when purchasing insurance. A failure to properly disclose the contents of your home or business may void or limit your policy payments, should a fire damage them.
While an insurance broker is able to help guide you and provide recommendations for insurance, it is your job to make sure the broker is accurately informed about your needs and the details of what you are insuring. Your insurance may have to comply with local bylaws, you may want to cover your business' losses while you rebuild, you may have employee wages or other expenses that must be paid in the interim, and you may lose profits during the rebuilding phase. However, if you do not tell your broker about these details, they are unable to provide you with the right recommendations for insurance coverage. Accordingly, it is important to make sure that you provide as much detail to a broker as you can when purchasing insurance.
Part 2: A Broker's Perspective
Key Considerations for Effective Insurance Planning
While the exact details of your insurance needs will vary on a case-by-case basis, it is always important to go over the following with a broker:
- Learn how your broker's firm calculates and assesses property value, or the value of the item to be replaced. Different firms use different calculations, and that can lead to a big difference when it comes time to make a claim with your policy.
- Discuss your long-term plans with your broker. Do you intend on upgrading the heating system in the future, installing a pool, or extending a wing of the property? All of these may impact your insurance coverage, eligibility for insurance, or the type of insurance you need. Don't assume your home or business' needs will be identical in five, ten, or 20 years, and discuss the possibility of changing needs over time.
- Sit down with your broker and discuss the risks of under-insuring or over-insuring a property or business. Your own risk-tolerance informs what a comprehensive insurance plan or policy will include. Making sure you are clear with your broker about your level of risk tolerance, and what absolutely must be covered in case of a fire is essential to ensuring the proper policy is provided.
Inadequate insurance coverage compounds the challenges faced after a fire. The timing, extent, and damage caused by fires can be unpredictable. The best way to counteract that is to be prepared.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.