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Tornado dispute highlights importance of brokers

When a tornado ripped through Ottawa’s east end on Sunday, June 02, it was followed by quite the media storm. It was the second tornado to sweep through the capital in less than a year, and, for many, it came far too soon after the pair of tornadoes that tore through the Ottawa-Gatineau in September, causing total insured damages of close to $295 million.

CTV News interviewed September tornado victims Mark and Karen MacDonald, who lost their Craig Henry home on Craigmohr Court. The couple said they “went out for pizza one day” and came home to find their home destroyed.

The MacDonalds’ story hit the headlines because of the huge value of their home. It was eventually destroyed in March 2019 and the couple filed a rebuild quote with their insurance company for $1,772,976. The catch? Their insurer has disputed the rebuild estimation, instead suggesting a rebuild cost of $1,493,649 – almost $300,000 less than what the MacDonalds are asking for.

Mark MacDonald, who is fighting the insurer in court, told CTV: “We paid our insurance, we thought insurance would remove the stress of anything that could possibly happen and instead it has added stress to our lives.” He added that the insurer’s rebuild quote doesn’t include his finished basement, garage, pool, landscaping and damaged home contents.

One thing this situation highlights is “the value of the broker,” according to Brian Irwin, president of the Ottawa Insurance Brokers Association (OIBA. In reaction to the CTV report, he said: “The value of the broker is paramount. It highlights the benefits of having someone come in and take a look at your house, evaluate your assets and make you aware of any issues, as opposed to buying insurance online in 30 seconds without having much of an idea about what you bought.

“Homeowners should carry out regular evaluations of their homes, and they should keep their brokers informed of any changes or updates they’ve made to their property. If you finish your basement or you add a pool to the backyard, you have to let your insurance broker know, because it increases the value of your house.”

One thing Irwin advises homeowners to do is to take a video recorder through their homes every 3-5 years and videotape everything they have. That makes it easier for homeowners to claim guaranteed replacement costs (GRC) on your homeowners’ insurance policy because it makes a strong business case for the insurance company. As proven in the MacDonalds’ case, insurers are going to scrutinize claims closely, so it’s helpful for homeowners to have some ammunition.

“For most people, the biggest investment you’re ever going to make is in your home. As such, you want to make sure that it’s properly insured,” Irwin told Insurance Business. “The issues arising out of the September tornadoes and the MacDonald case are highlighting that, to no end, people really need to be vigilant and take a close look at their insurance policies. No longer can you buy home insurance on price. You have to buy on coverage. Different insurers are limiting and changing coverages on their policies, so brokers need to make sure they’re up-to-date and providing adequate advice.”

As well as ensuring their insurance policies are adequate and up-to-date, homeowners should put together (with the help of their brokers) a well thought out tornado and severe wind protection plan, according to the Canadian Institute for Catastrophic Loss Reduction (ICLR). The ICLR has developed a handbook that identifies several steps homeowners can take to protect their homes from severe wind damage, including (but not limited to): talking to local government for municipal advice; talking to your insurance broker; having a building inspector evaluate your home; storm-proofing the roof; and securing doors, windows, porches and overhands, garage doors and loose outdoor objects.

The institute noted: “With population and development increasing in at-risk areas, tornado and severe wind activity has serious implications for homeowners across Canada. While homeowners cannot predict violent wind activity, they can take steps to protect themselves and minimize damage to their homes.”

Source: by Bethan Moorcraft for Insurance Bureau Canada


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