The financial threats of rural fires

Insurance | Print Article

[Autumn 2014]

When you live on a rural property or lifestyle block, fire has the potential to cause major damage.

A Nelson couple felt the ramifications after a fire started from their lifestyle block and spread into an adjoining forestry block. The Fire Service and an adjoining forestry owner obtained a substantial court judgment against them. They are not the first to be caught in this trap and it is a situation where ordinary, sensible Kiwis can face catastrophic financial losses.

Primarily this is an insurance issue and you should check with your broker to ensure that you have appropriate cover. This is particularly so for lifestyle owners who need to make sure that they are covered for any commercial operations. An insurance loophole is one of the things that caught out a Nelson couple.

Most people will be aware that if they deliberately or negligently start a fire that damages someone else’s property then they may have to compensate that property owner, but they are often not aware of the further risks under the Forest and Rural Fires Act 1977.

This Act deals with the structure of the Rural Fire Service and how it is financed. Hidden in the finance section is section 43 which allows the Fire Service to recover the costs of putting out fires from anyone who caused the fire. This may sound fair enough but there are a couple of things you need to be aware of:

  • You can be liable even if you have not been negligent, just as long as it can be shown you caused the fire (this is known as strict liability). For example, if you have taken all reasonable steps to ensure that your burn-off did not get out of hand and you were caught out by a freak weather change you still could be liable.
  • The cost of putting out a rural fire can be significant. It doesn’t take much of a blaze (particularly when you include helicopter hire) before the costs can get up to hundreds of thousands of dollars. The Fire Service costs can easily exceed the amount of property damage.

The Nelson couple’s problems started when they disposed of ashes they thought were cold, from a fireplace in a tourist cabin.

There have been unfortunate hunters who have had a cooking fire get away on them and ended up with a very distressing invoice from the Fire Service. Another example is a farmer who did not clear trees away from power lines.

The possibilities for disaster are endless, so check out your third party liability cover and ensure it includes claims under the Forest and Rural Fires Act.