The excerpted article was written by NORMAN DE BONO | The London Free Press
Home insurance rates may spike in London if the city goes after insurers when firefighters respond to a home blaze, an Insurance Bureau of Canada official says.
But a business that helps communities get money from insurers called the threat a lobby group “scare tactic.” Ken (Ted) Woods, a partner with Fire Marque Inc., said the hundreds of communities it works with, including St. Thomas, Sarnia and Middlesex Centre, have not seen rates rise.
At a recent council committee meeting, Ward 12 Coun. Elizabeth Peloza suggested city staff look into contracting Fire Marque, which files insurance claims on behalf of communities to recover some of the costs of responding to home fires.
If there is home blaze, firefighters respond to and if the home is insured, Fire Marque files a claim on behalf of the municipality, as the homeowner policy covers the service. That claim seeks partial reimbursement of the cost of firefighters’ response.
“If the individual has an insurance claim, charges added to the claim will see an increase in claims paid,” said Peter Karageorgos, the insurance bureau’s consumer and industry relations director. “Premiums for policies are driven by costs, if this increases total costs, it will have an impact on premiums.”
Not so fast, said Woods: Premiums won’t increase because most homeowner insurance policies include coverage of firefighters attending a home blaze, meaning that money is sitting there and available and most homeowners are unaware of it. If the money is not claimed, it simply boosts the insurer’s bottom line, he added.
“We act on behalf of the municipality. Our job is to make sure the insurance company honours the coverage in the policy,” said Woods.
Studies by some communities have concluded the claims don’t affect premiums, he added. Home insurance policies have a clause titled “fire department charges” that usually offers as much as $1,000 in coverage.
Fire Marque offers its services to more than two million people in “hundreds” of communities, Woods said.
In her pitch to community and protective services committee colleagues, Peloza said she met Fire Marque officials at a Federation of Canadian Municipalities conference. The committee voted to refer the matter to staff for more study.
When the city looked into the issue in 2016, it found Fire Marque claimed 30 per cent of the money recovered. A staff report said the city would have recovered anywhere from $43,000 to $142,000 a year at that time. The money must go toward fire services, either education or capital costs.
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“We will lay out the information for council, we will investigate this and report back,” said Cheryl Smith, the city’s director of neighbourhood, children and fire services.
The staff report in 2016 recommended the city not contract Fire Marque, citing “legal risk and financial concerns . . . related to recovery of costs through property insurance policies.”
Karageorgos said homeowners already pay for fire department services through property taxes and home insurance policies, and an additional claim should not be necessary.
“Don’t property taxes already pay for fire service? I would be asking then why am I paying taxes? Is this creating a two-tier system?”
Municipalities have turned to Fire Marque as budget pressures prompt them to seek new ways to generate revenue, he added.
“What’s next? Will firefighters insist on a credit card payment before they put out your fire?”
Source: London Free Press