A British Columbia resort destroyed in the McDougall Creek fire is suing its insurance broker, alleging it was left exposed to catastrophic losses because crucial coverage was missing.
Lake Okanagan Resort, which was razed in August 2023 during one of the province’s most severe fire seasons, has filed proceedings in the B.C. Supreme Court claiming that Western Financial Group failed to identify or warn of deficiencies in its insurance programme. The action has been brought alongside a related holding company owned by the same parent.
The blaze, part of the Grouse Complex that swept through the Okanagan Valley, forced mass evacuations and destroyed more than 200 structures, including the lakeside resort. While policies were in place covering the marina, gas bar, general liability, property, and environmental impairment, the claim states there was no protection for essential utilities. Without water, sewage and electrical services, the resort says rebuilding is impossible and the few surviving buildings remain uninhabitable.
The companies argue Western Financial should have alerted them to “potential gaps” in cover. None of the allegations have been tested in court, and the insurer has not yet filed a response.
The case highlights the scale of climate-related risk to commercial property and the importance of policy scrutiny, particularly as mortgage lenders weigh exposure to fire-prone regions. For mortgage professionals, the dispute underscores the way underinsurance can compromise asset values, impede recovery, and increase default risk when borrowers cannot reinstate collateral.
The McDougall Creek fire, fuelled by drought and high winds, burned nearly 14,000 hectares and forced more than 35,000 people from their homes. Insured damages have been estimated at more than C$480 million. Among the losses was the historic resort complex on Okanagan Lake’s shoreline, long a fixture of the local tourism economy.
Western Financial, now led by chief executive Grant Ostir, has recently unveiled an ambitious growth strategy focused on service excellence and customer-centric design. “The insurance landscape is rapidly evolving, and Western is positioning itself at the forefront of this transformation,” Ostir said earlier this year.
But the Okanagan lawsuit will test whether the company met its obligations to long-standing clients. For lenders, brokers, and insurers alike, the litigation is a reminder that when catastrophic risk materialises, the absence of comprehensive cover can translate into stranded assets, impaired repayments, and prolonged financial distress across the property chain.
