The increasing frequency and severity of wildfires across Western Canada have underscored the importance of ensuring that strata and condo properties are valued accurately to reflect the true costs of replacement in the event of a significant natural catastrophe.
Destructive wildfires do not just result in one or two claims, but potentially hundreds, which contributes to labour and material issues that compound replacement costs.
This reinforces the need for property owners to ensure their appraised values are comprehensive and reflective of current market conditions, especially in regions prone to natural disasters like the Lower Mainland and Vancouver Island in BC.
The B.C. Financial Services Authority (BCFSA) has highlighted the growing risks from natural hazards, including wildfires, and emphasizes the need for a robust approach to managing these uncertainties. They urge financial service providers to accurately identify, measure and manage these risks, which is crucial for maintaining resilience.
Insurance to Value Hasn’t Kept Up with Wildfire Replacement Costs
As we’ve seen in Fort McMurray, AB, in 2016, Okanagan, BC, in 2023, and most recently in Jasper, AB, wildfires can damage significant portions of a town or city. All affected individuals require very similar materials and trades to repair or replace their property.
I think one of the biggest lessons we’ve learned from this has been the challenges with labour and materials following such a significant cause of loss.
As one small micro example, we’re looking at potentially hundreds of properties that had been mass evacuated for long periods of time, and now we need to do a line order for hundreds of new refrigerators because of food spoilage.
Or, when we’re talking about the labour, only a certain number of local restoration contractors — particularly in smaller rural areas — are available to respond to the damage. Cost escalations are factored in whenever you’re dealing with that type of labour shortage.
This makes it vital for strata and condo corporations to ensure their insurance appraisals are up-to-date and reflective of potential cost escalations that could arise following such events.
High-quality data is crucial for managing these risks, yet challenges remain in data availability and standardization, as noted by BCFSA.
At Acera Insurance, we understand the importance of leveraging a reputable and up-to-date appraisal to provide policyholders with peace of mind. Accurate appraisals ensure that insurance payouts are sufficient to cover the true costs of repair or replacement. Policyholders who rely on timely appraisals are better positioned to avoid out-of-pocket expenses and delays in their recovery.
Understanding How Off-Cycle Appraisals Are Responding to Wildfires
Experienced appraisal companies are continually refining their methodologies to ensure that their valuations remain accurate and relevant. As wildfires reshape our understanding of natural catastrophe zones, reputable appraisal firms are consistently evaluating and updating their data points.
Working with an appraisal company that specializes in strata and condo properties within your region ensures that appraisals are comprehensive and reflective of the latest risk assessments.
But appraisals are only part of the equation. As a specialized insurance broker, we add value by recommending strategic adjustments to insurance renewal dates, especially moving them outside of wildfire season. This proactive approach can prevent coverage gaps and ensure that your insurance is in place when you need it most.
We also ensure that a large panel of insurers is utilized to create a resilient and strong insurance program, one that supports claims payments and provides long-term stability. This diversification is key to minimizing risk and ensuring that your insurance coverage is both reliable and sustainable.
Additionally, our expertise in handling large loss claims means that we are well-prepared to support our clients when they need it most. With large claim triage protocols and redundancies in place, we provide best-in-class support, ensuring that your claims are handled efficiently and effectively.
The Importance of Insurance to Value
As appraisal companies adapt their approach, it’s crucial for strata and condo corporations to stay informed and proactive. Insurance to value means considering all relevant factors, including debris removal, bylaw upgrades, and the potential impact of surge pricing in catastrophe scenarios.
The key takeaway for strata and condo corporations is to utilize appraisals to determine appropriate replacement values, ensuring that their insurance coverage aligns with the latest market conditions and regional risks. It is essential to partner with a specialized appraisal company that understands the unique influences in your area.
Wildfires Lessons Better Prepare Us for Tomorrow
These evolving risks highlight that the insurance needs of strata and condo corporation policyholders are dynamic. We must continue to take all of these teachable moments from large events, like destructive wildfires, to improve our policyholders’ coverage.
Our goal is for our clients’ policies to response exactly as it should — and as they expect — following significant events.
Taking the time to look back on wildfire scenarios to understand and do better will allow us to plan forward better.
Danielle Russell, Director of Real Estate at Acera Insurance, specializes in realty and development insurance and risk mitigation solutions.