HH council hears fire insurance presentation

·8 min read

Dwayne Sutherland from McDougall Insurance gave a presentation on fire insurance to the Municipality of Hastings Highlands council at their April 20 meeting, and how said insurance was generally calculated with regard to proximity to fire halls to determine insurance premiums. After some questions and comments from council, they thanked Sutherland for his presentation and he invited them to contact him with any further questions or concerns.

David Stewart, the CAO/treasurer, said that Sutherland’s presentation on April 20 was spurred by a council resolution passed Jan. 7 to contact McDougall Insurance to have them give a presentation at their earliest convenience, on the policies related to the municipality’s fire insurance. This was due in part to the closure of the Lake St. Peter fire hall no. 5 late last year due to structural deficiencies identified by engineering firm D.M. Wills and Associates and the subsequent larger distances that the remaining fire halls have to cover to ensure adequate fire service coverage.

Sutherland is a partner and branch manager with McDougall Insurance and Financial. Mayor Tracy Hagar introduced him at the April 20 meeting and Sutherland said he was there to do a high-level presentation on how insurance companies rate property insurance with respect to distance from fire halls. He did provide a disclaimer before he began, saying that this was not how all insurance companies deal with property insurance premiums, that every one could vary slightly due to different underwriting rules and that there were tonnes of different insurance companies that look at a number of different factors. Therefore, he stressed his presentation was for information purposes only.

Sutherland mentioned superior shuttle tanker discounts that would not be applicable to North Hastings, but is more common in more densely populated centres. He said it is an extremely expensive certification process and a lot of training would need to be completed for any fire service attaining this type of insurance discount.

More common to the North Hastings area are the fire hall protected rates, or areas without hydrants, according to Sutherland, although it varies with different insurance companies.

The distances from fire halls by dwellings looked at by potential insurance companies are; within five kilometres which was pretty common, within 13 kilometres, which was most common, and then within 16 kilometres and within 21 kilometres, which were less common, according to Sutherland.

“So, for a lot of insurance companies, beyond 13 kilometres is generally what they consider unprotected and that designation is certainly the higher rates that a property would have,” he says.

Sutherland said there was also a difference between unprotected rates and un-serviced rates, with the former being a dwelling with a fire hall over 13 kilometres away, and the latter being a dwelling in an area with no fire department at all.

The presence of dry hydrants, large bodies of water and fire pumps were also brought up by Sutherland, who says some home owners ask if there would be a discount if they have those in place. The answer to that would be no, as the insurance companies see them as a great risk management tool but there would still be a need for professional assistance to make them work effectively in an emergency situation. The dwelling’s distance to the nearest fire hall remains the barometer for calculating the insurance rates.

Any closure of a fire hall nearby to a home owner puts the responsibility on them to inform their insurance company as soon as possible, as their premiums may rise. Sutherland said it was good to work with them by keeping them apprised of any changes and therefore getting the best applicable rate. He said if a home owner knowingly keeps the information of a fire hall closure from their insurance provider, it could end up in a claim denial, although the insurance company would have to prove that this was done deliberately to save on premiums. They could also cancel the policy, but Sutherland says it would be fairly unlikely that would happen, because again, they’d have to prove deliberate omission to save on insurance rates.

Hagar asked council if they had any questions for Sutherland. Councillor Nancy Matheson commented that she was surprised that property insurance was not regulated like auto insurance and that dry hydrants would not offer better rates to consumers. She said she’d had a question about the superior shuttle tanker discounts and if that discount would apply to all tankers and Sutherland had answered in his presentation that it does not, so she thanked him for that and for his presentation. Sutherland said he had more information on that and offered to forward that to Matheson, which she accepted.

Deputy Mayor Dorothy Gerrow thanked Sutherland for the important information that was important for their stakeholders. She posed a hypothetical question to him; if a person close to a fire hall that closed, but were still within a distance to a fire hall where they’d get a decent rate, is it imperative that people check with their broker anyway regarding changes to their proximity to a fire hall, and if this was not done, could that be construed by the insurance company as a non-disclosure of information. Sutherland said it was always a good idea to check with the broker in these cases. He said they don’t use exact distances to a fire hall, but would say less than five kilometres, less than 13 kilometres, etc.

“Most certainly, if you’re jumping that band, it’s a good idea to have that corrected. However, with any change to your policy along those lines, it’s definitely worth a call to your broker,” he says.

Sutherland said it’s best to err on the side of caution and check, as a home or dwelling is most people’s most valuable asset, so you want to ensure it’s protected properly.

“You never know, there could be rating criteria there and you want to make sure you’re getting the best bang for your buck and that you’re getting all your discounts,” he says.

Hagar had a question about premium amounts with unprotected areas (13 kilometres or more from a fire hall) and un-serviced areas (without a fire hall). Sutherland said they don’t run into that a lot because there a few areas in the province that are un-serviced. He said that some companies may not cover them at all or they may use their unprotected rates and add 20 per cent to 25 per cent.

“We do have un-serviced areas here because there is that exposure, but for insurance in general, it’s a pretty small number,” he says.

Sutherland clarified, based on a question from Hagar, that an unprotected area’s rate would be about 78 per cent above the base rate, which is a dwelling that is less than five kilometres from a fire hall.

Councillor Tammy Fitzgerald said she was struck by two things; the big variety with how insurance companies set their rates and how it was the responsibility of the homeowner to keep their broker up to date with their circumstances so the broker can get them the best protection and rate.

“That’s something people really need to know. It’s not the job of the municipality to get people the cheapest insurance rate but everybody, it’s extremely important that everybody does this and knows that variety is out there and you have to give your broker all the information you can to get that best price,” she says.

Sutherland agreed, but also reiterated that while there was definitely onus on the consumer, there is also onus on the insurance broker.

“If a local broker knew there was a change to fire hall status, it would be a major undertaking for us to contact anyone we knew affected because we have an onus to them, a duty of care,” he says.

Councillor Alex Walder had a question about how the insurance companies determine house replacement costs with a claim. Sutherland says that this determination is solely for the cost of the building’s replacement, what it would cost today and the removal of debris, and does not take into account the value of the land, whether it is waterfront or any property factors. He says that when a claim is written, they have an industry recognized program that does an estimate of the replacement cost and each year, insurance companies add on to account for inflation, to keep the limit of insurance in line with inflation.

Sutherland told council that if they had any further questions to get in touch with him.

“I’ll see if I can get any more information on superior shuttle discounts that we see locally. We are here to help and we’ll gladly try to get any answers for you,” he says.

Hagar thanked Sutherland on behalf of council and said they were impressed with his presentation on fire insurance.

“The information was wonderful and is much appreciated!”

Michael Riley, Local Journalism Initiative Reporter, The Bancroft Times

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