When most people think about wildfires, they think about damaged homes, smoky skies, and evacuation alerts. What many buyers and sellers don't realize is that wildfires can also disrupt real estate transactions long before a property is ever threatened by flames.
In British Columbia, wildfire risk has become more than a property concern—it's now a transaction concern. During wildfire season, a buyer's ability to obtain home insurance can directly impact whether a sale closes on time, gets delayed, or falls apart altogether.
The Growing Connection Between Wildfires and Real Estate
In recent years, insurers have become increasingly cautious about issuing new policies on properties located near active or out-of-control wildfires. Depending on the insurer and the situation, restrictions may apply to homes located anywhere from 25 to 100 kilometers from an active fire, particularly if the property falls within an evacuation alert or evacuation order area.
Even when a home itself is not in immediate danger, insurers may temporarily suspend new coverage until wildfire conditions improve. This creates a challenge for buyers who are approaching their completion date.
Why Insurance Matters So Much
For most buyers, obtaining home insurance isn't just a recommendation—it's a requirement.
Mortgage lenders typically require proof of insurance before they will release mortgage funds. Without a valid, active policy in place, financing may not be advanced, regardless of how close the transaction is to completion.
One of the biggest misconceptions buyers encounter is the difference between an insurance quote and a bound policy. A quote simply indicates that coverage may be available. A bound policy means the insurer has officially committed to providing coverage.
During wildfire season, that distinction becomes critical. A buyer who receives a quote weeks before closing may discover that coverage can no longer be bound if wildfire conditions change before the completion date.
What Buyers Should Do
The best strategy is to start the insurance process as soon as an offer is accepted.
Rather than waiting until the final days before completion, buyers should speak with their insurance provider early and ask important questions such as:
Can the policy be bound immediately? when can it be bound?
Are there wildfire-related restrictions for this property?
How close can an active wildfire be before coverage is affected?
Does the property's fire protection status influence eligibility?
What happens if wildfire conditions change before closing?
Having these conversations early can help identify potential issues while there is still time to address them.
What Sellers Should Do
Sellers also need to be mindful of wildfire-related insurance risks.
It's important to maintain existing insurance coverage until the transaction has fully completed and ownership has officially transferred. If a deal falls apart because a buyer cannot obtain insurance, a seller who has already cancelled their policy could find themselves unexpectedly uninsured during wildfire season.
In some circumstances, obtaining new coverage after cancelling an existing policy may be difficult if wildfire activity has increased in the area.
Keeping insurance in place until the deal is complete is one of the simplest ways sellers can protect themselves and their property.
Contract Clauses Can Help
Recognizing the growing impact of wildfire-related insurance issues, the real estate industry has developed optional contract language designed to address these situations.
A wildfire-related clause can provide additional time for completion, adjustments, and possession if a buyer is temporarily unable to obtain insurance because of wildfire conditions. Rather than forcing a deal to collapse, the clause can allow both parties additional time for conditions to stabilize and insurance coverage to be secured.
These provisions can be particularly valuable for rural properties, homes near forest interface areas, and communities where wildfire conditions can change rapidly.
The Bottom Line
Wildfire season has added a new layer of complexity to real estate transactions across British Columbia. Today, insurance availability can influence whether a lender funds a mortgage, whether a buyer can complete a purchase, and whether a seller remains protected throughout the transaction.
The key is preparation.
Buyers should obtain insurance quotes early and understand exactly when coverage can be bound. Sellers should maintain their existing coverage until the transaction is fully complete. And both parties should consider whether contract language addressing wildfire-related delays makes sense for their situation.
In today's market, wildfire risk isn't just something homeowners need to think about after they own a property—it has become an important part of getting the deal across the finish line in the first place.
