Thousands of people in the Fort McMurray area have lost everything they own to the wildfire that still rages in Northern Alberta. As victims begin the long process of recovering from the disaster, the last thing they want to deal with is stingy insurance companies, but apparently that’s exactly what’s happening.
A report by the Globe and Mail illuminates the struggle some Fort McMurray evacuees have been having getting their insurance companies to actually pay out the full value of the property and possessions destroyed by the flames.
It’s reasonable to assume that insurance company staff in the area are struggling to process the thousands of claims generated by the disaster. Many residents have had to accept long wait times for damage appraisals by the company. However, there is also an issue with insured victims not getting paid enough for their property and possessions.
One such resident named Bruce Thompson only received $60,000, a third of what he claims his property and possessions are actually worth. Bruce, a 57-year-old heavy equipment operator, says he won’t accept the appraisal and is seeking legal advice. Like many in the region, these were already trying times in the aftermath of the oil downturn last year. For some of them this fire could have destroyed more than just buildings and possessions, but chances are high that it has irrevocably altered the trajectory of these victim's lives.
Bruce's insurance company would not discuss particulars of his case, but the brokerage that sold him his policy told Globe and Mail "a property loss is determined by the type of policy the homeowner has purchased and a policy can provide replacement coverage or cash at the time of the loss, with depreciation factored in." What they're talking about is the difference between getting a policy that'll pay actual cash value versus one that will pay full replacement value. While most people automatically go for replacement value because of its better coverage, it's possible Bruce may have only had actual cash value coverage. It’s times like this that having the right home insurance coverage is absolutely essential.
These kinds of situations tend to turn insurance companies into villains. They are a business and therefore must think about their bottom line. That being said, does that mean insurance agents purposely rip off people in desperate situations like this?
Chances are, no, they don't.
The insurance claims process can feel a little antagonistic when you’ve just lost everything. In their defence, the insurance companies are facing the biggest disaster situation of their lives and they have a responsibility to thoroughly investigate and make sure people aren't taking advantage of the situation to take money that could be used to help some other family. Claims can often take weeks or months to process and can will probably become emotionally draining.
Make sure to review your home insurance coverage regularly, updating it if the value of your home or possessions change.