When the fires came to Los Angeles in January 2025, many wondered what would happen next and what lessons Canadians could learn from the situation.
We reviewed the California Department of Insurance’s non-renewal moratorium page, the Department’s explanation of the California FAIR Plan, the Insurance Bureau of Canada’s wildfire coverage guide, and Natural Resources Canada’s review of changing wildfire conditions to see how fire claims were handled and what candian homeonwers can learn from those events.
What Do the LA Fires Mean for Canadian Homeowners?
Homeowners in Canada shouldn’t assume that counterparts to California’s initiatives will happen here. Instead, they should review their policies to determine limits of liability, terms of settlement and other factors that can come into play when an insurer pays a claim.
IBC notes that most tenant and homeowner insurance policies in Canada include coverage for fire damage.
How Fire Insurance Claims Are Handled After a Major Event
When natural disasters like these wildfires occur, insurance companies have to foot a massive bill, ultimately impacting their operational capacity. The January 2025 fires have brought renewed scrutiny to insurance companies and the complex web of factors that shape their underwriting decisions. Underwriting involves analyzing potential risks to set premiums, define coverage terms, or decide whether to provide insurance at all. In high-risk fire zones, insurers have found it impossible to set premiums that reflect the real danger of wildfire damage while keeping coverage affordable for homeowners and businesses.
A moratorium does not address how a claim is settled.
| California measure | What it does | What it does not do |
|---|---|---|
| One-year moratorium | Within protected areas, some cancellations and non-renewals were restricted for qualifying residential policies. | Permanent renewal protection or determining the amount of a fire claim |
| California FAIR Plan | Limited fire and smoke coverage where regular-market insurance is unavailable | A comprehensive homeowner policy |
| Claim under an existing policy | The terms, limits, deductible and proof requirements in effect on the date of loss apply. | The disaster does not expand the policy. |
Read More: Read the Canadian Wildfire Insurance Guide
How Cause, Liability and Coverage Differ
Canadian readers should protect evidence, follow instructions from their insurer and file an insurance claim.
Insurance payouts may occur before investigators determine who is responsible for a fire. An insurer may attempt to recover from the person or party responsible.
What Canadian Homeowners Should Check
Some properties are at higher risk than others. Vegetation, terrain, road accessibility, municipal firefighting resources, building materials and setbacks in the yard can all have an impact.
Natural Resources Canada attributes a lengthened wildfire season and changing geography to a trend toward warmer, drier conditions. But what does this mean for wildfire risk where you live?
Big-picture reporting doesn’t address the wildfire risk at a specific property, and that’s what matters during evacuations and rebuilding. That’s why we suggest looking more closely at your home insurance policy at your next renewal.
Check:
- Your dwelling limit and whether you have extended or guaranteed replacement-cost coverage
- Limits on additional living expense coverage, including dollar limits and the number of months
- Whether landscaping, clean-up, outbuildings and code upgrades have separate limits
- Whether you’ve completed a FireSmart self-assessment; consider photographing your mitigation efforts annually with the date and time settings active
Read More: Read How the Jasper Wildfire Affected Canadian Insurance