melloInsurance

Serving our clients, Serving our community

Wildfire

The State of Emergency

No matter how smart we become or how much data we collect, surprises are imminent. We cannot predict everything, we cannot prevent every bad thing from happening. This COVID-19 is a prime example of that. Mother Nature also has a wicked side to her.

Flooding, Wildfires, Hurricanes, Earthquakes, Volcanoes, Hailstorms, Plow Winds, Tornados, Ice Storms.

As humans, we learn, change, adapt to these situations and that helps us be more prepared moving forward. For example: In construction, building codes have changed dramatically in the past 50 years, to help prevent fire losses with the use of better material, wiring, automatic breakers, smoke detectors, along with the quicker response and better equipment from local fire departments, etc.

However, these large catastrophic losses come without warning and have serious repercussions: Slave Lake Wildfire, Calgary Flood, Fort McMurray Fire and the more recent Ice Jam/Flood this spring.

There are a few things that insurance companies put in place during and after these events that affect us. When a “State of Emergency” is declared, Insurance companies limit what insurance agents and brokers are able to insure. They reduce our “binding authority” and require additional information on the risk and sometimes reject insurance on certain areas depending on the circumstances. For example, if there is an ongoing wildfire, most insurance companies put a radius restriction on any new insurance. If you wanted to insure a cabin or home and your property was within 50km of the wildfire, you would likely be unable to insure it. This radius restriction varies from insurance company to insurance company, and some may reject insuring the risk entirely based on GPS coordinates.

Therefore, it is always important to carry insurance PRIOR to any potential loss. We cannot backdate insurance. If this was possible, insurance wouldn’t exist as they would all be out of money. You need to buy insurance while things are good in hope for nothing bad to happen. And if it does, you’ll survive financially, because you were prepared and have the proper protection in place. 

The next thing insurance companies will do, is after the dust settles from a catastrophe, they study the data. They study trends, locations, risks, behaviours, construction details, etc., and come up with a strategic plan on what they will be doing in the future. If claims costs surpass revenue, they will have to make changes. Rates will increase, appetites will change, and this is usually when a hard market surfaces.

So what is a “hard market?”

A hard insurance market represents a high demand for insurance coverage with a  low supply. Insurance carriers implement strict underwriting standards and issue a limited number of policies. Premiums are high and insurers are disinclined to negotiate terms.

As most of you may have noticed, insurance premiums continue to rise and the requirements  insurers ask for, have become more and more demanding. That is because we are in the middle of a hard market. High claims costs from CAT losses, combined with the high value claims in the auto sector (hail losses and higher costs to repair due to technology/sensors in vehicles), has caused insurance companies to struggle and make changes. Therefore, it is more difficult to buy insurance and the price continues to rise.

As much as we don’t want to believe it, our insurance rates that we pay, are based on our own property, claims and behaviour, IN ADDITION to the claims and losses of others. That is the foundation of insurance. We pool money together to help those who suffer from unfortunate circumstances. 

So what happens next?

Our hope is that these weather related CAT losses taper off (hard to predict), and claims related to human error can be predicted, corrected & prevented. The COVID-19 crisis has reduced auto related risks as fewer people are driving, so that may result in lesser claims and potential revenue for insurance companies. (cross fingers)

We never can predict what the future brings, but we can plan for the worst and hope for the best. We buy our insurance ahead of time, we build or repair our homes stronger with better material, use better equipment and HOPEFULLY we reduce or maybe even eliminate the possibility of a claim from arising. If we each do our part, we can make the future brighter.

Volunteer Fire Fighting Coverage – “Is this something I need?”


As most of you have seen, the fires in BC have been problematic again this year. The summer was dry and fires spread ferociously. In Saskatchewan, we had a few grass fires as well. They were not as severe, however they did cause a fair amount of natural damage and kept the fire departments busy.

These wildfires can be very hard to contain. One fire department is usually not enough and it takes a “village,” so to speak, to put these fires out or contain them. For every department that shows up, they will generally have both a call out fee and an hourly fee based on how long they were on the scene. In most urbanized centers, your taxes will include the costs of a fire call-out. However, in the rural areas or smaller towns, there may often be an invoice for these services that you are responsible for. This is something you should look into with your local RM or  Municipal office.


In our local Saskatchewan departments, the average call-out fee is around $1200. The hourly rate is close to $1000 per hour. This means that if you had a house fire, shop fire, machinery fire or grass fire that you were responsible for, and one department spent 10 hours on the site putting out the fire, you could end up with an invoice of over $10,000. Now imagine the fire spreads to other locations and now 2 or 3 local department show up. This could end up being $20,000-$30,000. This seems far fetched, but we had 2 fires this year alone where the fire departments reported invoices of close to $20,000 and $40,000. The invoice usually gets sent to the land or property owner where the fire originated. So even though the fire did minimal damage on your property, if it spreads to other people’s property, you can still be on the hook for all the firefighting costs.


To protect yourself from these potential costs, you can add volunteer fire fighting coverage to your home/farm policy. Most RM administrators are recommending around $20,000 coverage for potential losses. Some insurance companies bundle this coverage with other packages to make them more flexible. For example, with My Mutual Insurance, you can purchase an “Agri-Shield” product which includes: Volunteer Fire Fighting, Debris Removal, Farm Building Contents – including Tack, and Tool Coverage. This package starts at a limit of $60,000, however, it can be increased. The reason that this is more flexible is that you can either use the full $60,000 for fire fighting if needed, or you break down the coverage as needed. For example, you have a shop fire and you need $10,000 for fire fighting, $25,000 for tools, $10,000 for debris removal and $10,000 for misc. farm contents. This coverage can be split up to reach those individual limits up to the total limit you have selected. Another potential scenario is a grass fire is starting on your land and you end up needing $40,000 to pay for fire fighting costs – this would all be covered under this package.

If you were to buy these coverages individually ($60,000 fire fighting, $60,000 tools, and $60,000 debris removal) this premium would end up being much more than the Agri-Shield product. Please give us a call if you would like to learn more about this product or would like to add these coverages to your policy.

“Only You can prevent forest fires!”

Other than the fire burning inside you, and the one roasting your marshmallows, fire can cause a lot of damage. There are currently some serious wildfires in Alberta, BC and Ontario. Firefighters are working tirelessly trying to put these out and contain the wreckage. So, first of all, thank you to all those putting their life on the line for our safety. Your efforts are appreciated greatly! Next thing, what can we (a typical pencil pushing, hammer throwing, citizen) do to prevent these things from happening?

Well, fire prevention has been pretty fresh on many people’s minds for quite some time now. How our houses are built, the urban infrastructure, the fire departments; they are all designed on how to put out and contain fires as quickly and efficiently as possible. Even the cooking products we buy, and the stoves we cook on – all have been changed over the course of time with fire prevention in mind. That is an ‘A+’ in the “prevent fires” column in society, as a whole.

So, “what can I do about this?”

  • Be responsible – throwing your cigarette out your window, leaving a campfire unattended, or starting campfires in “no fire” zones. People do outrageous things without thinking and it can end up causing a lot of damage. Please use common sense and be responsible. If you see someone do something like this, speak up! We need people to understand that their actions can hurt others.
  • Maintain equipment & machinery – Keeping your equipment, machinery and electrical components clean and in good working order will go a long way in preventing workplace fires or fires at home. Make sure qualified people are the ones working on the equipment.
  • Good housekeeping – Clutter can be a problem in causing fire, spreading it or blocking exits if a fire occurs. Make sure you keep it to an absolute minimum.
  • Test fire alarms – Despite all the technology and fire safety equipment out there, malfunctioning equipment is still a problem in many homes and workplaces, which allows fire damage to start and spread. Please test your systems and make sure your equipment is serviced and ready.
  • Fire Insurance – This is the elephant in the room, but purchasing fire insurance will give you ‘Peace of mind’ if something terrible were to happen. Just because you follow all these tips to a ‘T’, doesn’t mean that something can’t happen. It may start somewhere else and spread. Make sure you do everything in your power to protect you, your family & your business.

The costs to repair the damages from these fires, unfortunately, is still going up. It begs the question as to how this is happening, especially if the number of claims is going down? The answer, well, it’s two things really. First, the costs to rebuild & repair have never been higher. Materials and good fair labour is getting more expensive all the time. The fires that do occur, are so large that the amount of wreckage is astounding. The damage that the Slave Lake and Fort McMurray fires amounted to is approximately $10 Billion. Yes! With a ‘B.’ That is not a small number. Live video footage of Fort McMurray fire below. 👇🏻

Fire is amazing, brilliant and mesmerizing, but it can be extremely destructive if not handled with care. Please make sure you take all precautions to prevent any uncontrolled fire and if one occurs, be prepared and have the equipment and the knowledge to stop it from spreading. This may be grabbing a nearby fire extinguisher, or grabbing a co-worker off the floor and running to the nearest fire exit. Be prepared, be safe and be smart.