Pam Barker and Craig Conklin were set to sell their house on July 28. Instead, they’re still living there.
The reason? The buyers can’t take possession because they can’t get insurance.
It’s a situation many are faced with as many insurance companies in the interior are closing their doors to new customers with wildfires looming over communities and many are faced with evacuation orders and alerts due to approaching wildfires.
Conklin and Barker live in 83 Mile, north of Begbie Summit.
“The new insurer says they won’t activate a new policy because we’re in an alert area, which we understand,” says Barker. Without the new policy, however, the buyer is unable to access their mortgage for their home.
Instead, the couple proposed something different to their insurer, Mutual Fire Insurance.
“We asked our insurance company, Mutual Fire to simply roll over our policy. Don’t make any changes, don’t change the coverage and basically put the buyer’s name on the property instead of ours, that way if anything happens they pay the buyer instead of us,” she says.
The insurance company said no.
“The best way to put it in layman’s terms for understanding is that there is a ‘preexisting condition,’” says Denise Yeng, the director of business development at Mutual Fire.
“If you are thinking about getting travel insurance they ask if you have any existing conditions. The reason why they do that is because if you go on that trip and the condition is exasperated, then you are likely not covered for that condition because it existed before you went away,” she says.
“With the fires being there, every company has generally the same guidelines with where we will and will not be able to provide coverage, but if it is within a certain area of an interface wildfire, meaning the wildfire is hitting different things all at the same time, so you’ve got residences, the forest and so forth, there is a greater risk of loss.
“The point of insurance is not to cover once there is already a loss otherwise no insurance company will be able to withstand anything.”
For Barker and Conklin, that’s not the issue.
“We can understand why they wouldn’t write a new policy on a place that hasn’t been insured,” says Barker.
“We understand that the insurance companies have to mitigate their risk but we feel like in cases where property is already insured that there is not a valid reason to not roll that over into a new owner. If they feel like there should be additional costs incurred, they could certainly charge or something they feel is fair there, but the bottom line is, in this kind of a situation, it doesn’t really matter who is living in the house, that is not going to change the behaviour of the fire.”
On Mutual Fire’s part, Yeng says that’s not how insurance works.
“Each new person who has financial interests in a home, in this case if she sold her home to somebody else, that other person would be considered new business to any insurance company and they would approach it as such,” she says.
A new client is considered differently, as each individual carries different risks, says Yeng.
“Unfortunately, with insurance you look at each policy with that particular person who has a financial interest.”
Yeng stresses that their policy is more of an industry standard, and is not unlike other insurance companies.
Sandra Lewis, the manager of AC&D Insurance, an independent insurance broker out of Quesnel, says that is generally the case. She says that on average, if there is an interface fire within 25 km of an area with fire hydrants, or within 50 km of an area without fire hydrants, companies are reluctant to write new policies.
“Insurance companies run like a business and they have to report to their shareholders,” she says, but she doesn’t want to put the blame on insurance companies.
“I can honestly say that the insurance companies are there when they can be there and they will pay out the losses gladly if you have paid the coverage,” she says. Mutual Fire Insurance donated $10,000 to Prince George to help with relief for evacuees and says they have been working with existing policy holders to give them whatever coverage is available from evacuation expenses to losses upon return.
Still, to Conklin, Barker and Lewis herself, it can be frustrating.
Because of the Green Mountain fire, a fire still listed as “active” that was burning to the south east of Quesnel, insurance companies have been reluctant to give out policies in that area as well.
Lewis says they do their best to explain the real situation on the ground to companies, who is in danger and what.
“We’re certainly trying everything we can and we’ve got one company in particular that is open to talk more than reasonably and some are just like absolutely not … there’s no negotiating.”
Lewis says she had found three companies that were willing to work with her in the area, particularly on houses that were already insured, although it was on a case by case basis.
The progress stalled recently as new fires have shown up on the BC Wildfire map — however small they might be — that insurers use to determine the fire risk.
“We have so many irate realtors here because they are losing deals like crazy,” says Lewis.
It’s something Conklin and Barker worry about as well.
“Obviously, selfishly, we would like our house to close because we would like to go and we would like our buyers to get in,” says Barker.
“Fortunately for Craig and I we’re not going to another job, we haven’t purchased another home,” she says. “But a lot of people are in much worse situations, who are losing now the house they purchased or the job they got because they can’t move down there because now they can’t buy a house.”
If buyers can’t get insurance they can’t get a mortgage, and if they can’t get a mortgage their real estate agent can’t get paid.
“There is such a domino effect,” says Conklin.
“We would like to see insurance companies step up and say let’s work with these people instead of stalling out this economy. There’s already going to be monumental costs involved with these fires but now we are adding those costs to real estate agents, adjusters and appraisers who are not working,” says Barker.
“We’re not asking them to write an insurance policy on a house that’s not insured and assume risk for something that is not insured, but if it’s insured they’ve already assumed that risk. Why not transfer it over to this person?”
Mutual Fire Insurance says when fires improve, writing new policies will come generally on a case by case scenario, depending on how each situation goes.
“We definitely understand the impact that the fires are having on residents and we are definitely stepping forward and trying to find ways to help the community, even if it’s not the ability to write a new policy right now.”
In the meantime, Barker and Conklin have put their travel plans on hold and are living in the house for the foreseeable future.