How Fort McMurray fires could impact home insurance
The whole nation felt the pain of those going through the horrible situation in Fort McMurray earlier this year. The fires destroyed so much land. Many were left homeless. Many communities were evacuated.
Now as the smoke clears, insurance companies are working on dealing with the plethora of insurance claims caused by the fires. The insurance companies are going to have to rebuild homes, provide those left homeless with a place to stay, and billions of dollars in other disaster-related expenses.
CBC released a daunting stat about the disasters:
“The Bank of Montreal has predicted the devastating wildfire could cost insurers as much as $9 billion while Moody's has estimated a total around $5 billion. Whatever the final tally, it will likely be the costliest natural disaster in Canadian history.”
The insurance companies now to have to spend billions of dollars on dealing with these fires. The numbers are frightening and they’re just estimates at this point.
How could the Fort McMurray fires impact your insurance rates?
Insurance companies have to rebuild their reserve funds
After spending billions of dollars on dealing with the insurance claims from this disaster, the insurance companies want to start replenishing the reserve funds for future issues.
How does an insurance company build up their funds? One way is by increasing premiums. This doesn’t mean that your home insurance rates will go up for sure, but the chances are certainly high that this will be the case.
Insurance companies will point to extreme weather conditions
There would be a huge outcry if insurance rates were to dramatically increase after one natural catastrophe. However, insurance companies can cite the recent weather anomalies when increasing rates. Canada has certainly seen its fair share of extreme weather. If the first half of 2016 is any indication of future weather patterns, there are definitely going to be many natural disasters that insurance companies have to deal with in Canada. This could give insurance companies the incentive to increase prices.
It’s a shame to see your home insurance increase because of factors out of your control, but as you may already know, insurance rates rarely decrease. There always seems to be something driving prices up.
It’s interesting to see what’s going to happen to insurance rates as a result of these fires. Only time will tell. I won’t even pretend to try to predict what insurance companies will do next.