Insurance Gaps & Wildfire Risk: What Strata Communities Can Learn from Lake Okanagan and Summer 2025 Vancouver Island Fires

When the McDougall Creek wildfire destroyed Lake Okanagan Resort in August 2023, a subsequent lawsuit revealed a devastating oversight: the property's numerous insurance policies: property, liability, marina, environmental, did not cover critical utility infrastructure.

Without water, sewage, or electrical systems, the remaining buildings are uninhabitable. The resort alleges it cannot rebuild without funds to restore the utilities infrastructure.

Now, in summer 2025, Vancouver Island has seen two major wildfires: the Mount Underwood and the Wesley Ridge fires (both now under control) fires https://cheknews.ca/all-wildfires-on-vancouver-island-now-being-held-or-under-control-1275844/ and we are not through with wildfire season yet.

These two recent fires knocked out power for 11 days to remote communities like Bamfield, triggered evacuations, and made roads impassable. https://www.thenorthernview.com/news/power-returns-to-several-communities-after-wildfire-damage-8211945

Myth vs. Reality

Myth: If the buildings are insured, we’re covered.

Reality: Without utilities and site services, insured structures can still be uninhabitable.

Why It Matters for Strata Communities

Townhouse and patio home strata developments rely on shared site services: water, sewer systems, shared electrical, roads, drainage, and landscaping.

Just like Lake Okanagan Resort, these are frequently overlooked in appraisals but they’re absolutely essential. In the face of extreme wildfire activity, including the recent Vancouver Island fires, it is not hard to imagine being left with intact buildings that can’t be lived in due to lack of utilities.

The Role of a Professional Insurance Appraisal

A comprehensive insurance appraisal must reflect the full replacement scenario:

• Utility systems (water, sewage, power, communications)

• Site improvements (roads, paving, retaining walls, curbing, landscaping, fencing)

• Amenities and specialized structures (clubhouses, outbuildings, docks)

• Local construction cost updates, accounting for fluctuating materials and labour

If these aren’t accounted for, a wildfire or other event could leave a strata with costly, uninsured infrastructure losses.

The Local Context – Vancouver Island & B.C.

In addition to strata, recent Vancouver Island fires highlight the importance of covered infrastructure. The Mount Underwood fire cut off power and road access to multiple communities and disrupted electricity service to around 500 BC Hydro customers for 11 days. Even if homes stand, without utilities they may be uninhabitable, or stranded altogether.

Key Takeaway

The Lake Okanagan Resort case and the 2025 Vancouver Island wildfires offer a clear and urgent message: Insurance gaps can turn a disaster into a total loss.

For strata corporations and property managers: don't assume coverage based solely on buildings. A thorough, professional appraisal that includes all essential infrastructure is the best safeguard to make recovery possible when wildfire (or any disaster) strikes.

If your strata hasn’t reviewed its insurance appraisal recently, especially in light of 2025’s wildfire activity, now is the time. Don’t wait until the smoke clears to find out what wasn’t covered. Contact your insurance broker and review your policy carefully.