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Insurance cost increase questioned due to wildfires

Property owner notified of a 30 per cent increase to his rates last month

  • Aug. 6, 2021 12:00 a.m.

A 100 Mile House commercial property owner is raising questions about the high cost of insurance renewal during wildfire season, after being notified of a 30 per cent increase to his rates last month.

William Grulkey owns the building at 378 Cariboo Hwy., which houses The Pizza Man and GBR Craft Burgers, and describes himself as a “responsible landlord,” with local property managers on hire to tend to the building and its tenants.

Grulkey said in 2020, he received notice that the property insurance on the building would be increasing from about $4,000 to almost $6,000. In an attempt to avoid that premium jump, Grulkey increased his deductible from $1,000 to $10,000. As a result, his premium only increased to $4,900.

Last month, he learned his premium was again set to jump from $4,900 to almost $6,800, even with the $10,000 deductible.

“I asked my broker what would happen if I were to bump the deductible up to $20,000,” Grulkey explained. “But the insurance company saw that coming and said if you increase your deductible, it only reduces your premium by $30.”

Under normal circumstances, Grulkey said his broker would shop around other insurance companies for a more affordable plan, but because 100 Mile House is within 50 kilometres of an active wildfire, no other companies will quote him.

“Because I’m renewing in forest fire season, it’s like paying for gas during rush hour in the morning,” he said, “I’m curious how many other businesses and property owners are being gouged by the insurance companies.”

It’s not uncommon for insurance rates and availability to be impacted by major events like fires, according to Rob de Pruis, director of consumer and industry relations with the Insurance Bureau of Canada.

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“When we see severe weather events like wildfires, it’s very common that insurance companies routinely have limitations for placing new policies,” de Pruis said. “Insurance is preparing for the unforeseen risk. You can’t buy house insurance when your house is on fire.”

De Pruis said there are many factors that can impact premium cost, such as claims history, maintenance, replacement cost, change in business type or increase in inflation value.

There are also factors that have nothing to do with the individual property, such as an insurance company’s overall claims from the previous year or investment income loss, which is something de Pruis said many insurance companies have faced over the past decade.

“A lot of times the premium increases are completely independent of individual circumstances,” he said.

There are policy options to help mitigate problems that can arise trying to renew during an event such as a wildfire, de Pruis noted. A ‘declaration of emergency endorsement’ can extend a policy’s renewal date and maintain coverage during such a scenario. Renewal dates can also be changed part-way through a policy term, which is something de Pruis recommends if wildfire season is a concern to property owners.

Concerned customers can also reach out to the BC Financial Services Authority, a Crown agency that is responsible for supervising and regulating the financial service sector.

Sarah Lusk, director of communications for the BCFSA, said they are monitoring the situation closely and encourage property owners to contact them with insurance-related concerns.

“While there’s no obligation for insurance companies to renew policies, we expect insurers to treat consumers fairly and comply with all regulatory requirements,” Lusk said.

Grulkey said he has no choice but to renew his plan at the higher cost, but has reached out to local politicians to make sure they’re aware of the issue. He said he worries about the future of business in 100 Mile House with such skyrocketing costs. In addition to the higher insurance premiums, his municipal property tax also increased drastically in 2018.

“There isn’t enough retail traffic to justify high rents, and the amount the municipality and insurance companies take off the top leaves very little to do repairs, let alone renovations that would benefit the town,” he said.

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