Experts are predicting that the Fort McMurray wildfire will be the costliest disaster in Canadian history from an insurance perspective. According to the Financial Post, the final insurance bill could be as high as $6 billion. Even the most conservative estimates place the total damages at $2 billion, which tops the catastrophic Alberta floods of June, 2013.
With the Alberta home insurance industry facing payouts in the billions of dollars, it will likely come as no surprise that premiums across the province are set to rise again. As a homeowner, it’s important that you understand why that’s going to happen.
First, though, here is some vital information for those affected by the wildfire:
- If you have not done so already, please be sure to register with the Canadian Red Cross if you’ve been evacuated. Complete instructions on what to do are available here.
- Affected homeowners should also start the insurance claims process now, even though you may not yet be allowed to return to your home. You should report the entire home’s contents to your insurance provider, who will make supply forms available to you.
- The Insurance Bureau of Canada is here to help if you can’t get home to retrieve important documents, or if you can’t remember who your home insurance provider is. Call the IBC’s hotline at 1-844-2ASK-IBC if you need assistance.
Why Home Insurance Rates in Alberta Are Set to Rise
Insurance industry insiders have been correctly warning that Alberta home insurance rates will be rising for a while now. The Alberta floods caused billions of dollars in property damages in 2013, but even before that things were trending upwards.
Storms are becoming more violent, more intense and more frequent. As a result, Alberta insurance companies have been paying out more in claims than they’ve collected in premiums for several years in a row.
It’s a virtual certainty that the Fort McMurray wildfire will bring about another rate increase. As a homeowner, it’s important for you to understand the reasoning behind the impending hike in insurance premiums. Insurance companies aren’t being greedy in a time of need; they’re struggling to deal with harsh financial realities.
The insurance industry is all about risk management. Insurers use a whole host of advanced strategies and statistical tools to predict risk and create mathematical models. These models enable them to figure out how likely a given client is to make a claim, and helps the insurance company set premiums at rates that will allow them to provide the coverage policy holders deserve without going out of business.
However, extreme events like the Fort McMurray wildfire and the 2013 floods can’t be predicted. When they happen, insurance providers have to honour their word and pay out policy holders for damages they’ve suffered. They then have to recover their losses in order to stay in business, and increasing premiums is one of the only available options.
Insurance rates go up when claims are submitted. For example, if you’ve ever submitted an auto insurance claim and received an insurance payout for damage to your vehicle, chances are you saw your premiums rise when renewal time rolled around. Major events that cause widespread damage, like the Fort McMurray wildfire, make across-the-board premium increases an unfortunate necessity to prevent the insurance industry from going bankrupt.
Keep Your Home Insurance Rates As Low as Possible
Here are some tips for keeping your home insurance in Alberta as low as possible:
- Share some of the risk with your insurance provider by increasing your deductible
- Purchase a home alarm system from a certified provider
- Ensure your fire detection system is fully up to date
- Combine policies through a single provider and save
For example, Lane’s Insurance offers a 20 percent discount to clients who bundle their home and auto insurance policies together. It’s a great way to trim costs without sacrificing quality of coverage.
More Resources from Your Friends at Lane’s Insurance
Lane’s Insurance is partnered with the most reputable providers of home insurance in Alberta. With extensive resources, great claims support and top-notch customer service, Lane’s is an ideal choice for Albertans looking for a new home insurance provider. Visit Lane’s Insurance online today to get a fast, free quote.
