Coverage based on “probable yield” shrinks after back-to-back climate losses, leaving vineyards underinsured.

Okanagan grape growers said British Columbia's production insurance program is failing them after this summer's wildfires tainted much of the valley's crop. Their main complaint is that coverage based on past yields keeps shrinking after successive bad years. 

Smoke from the August wildfires, including the Bald Range fire near Summerland, contaminated grapes across the region. Smoke taint gives wine an ashy, smoky flavor that can make fruit unusable. Some growers have lost entire harvests. Ron Kubek, owner of Lightning Rock Winery in Summerland, said all of his 2026 grapes are unusable, so he’ll have to buy fruit from other growers to make wine.

How the coverage works

Under BC’s grape production insurance, growers can insure 50%, 70% or 80% of their “probable yield,” and are paid when an insured peril pushes their harvest below that level. The listed perils include hail, spring frost, drought, flood, wind, landslide, fire, rain and freeze. Smoke isn’t listed as a separate peril.

Jesse Gill, owner of Okanagan Hills Winery Group, said probable yield is based on historical production averages. When climate events cut yields year after year, those averages fall, and so does the coverage. He estimated his crop would have been worth about $600,000 this year without smoke taint, but said it is insured for about $130,000 because of earlier losses.

Growers have raised a second issue. Under the program’s rules, they say, only harvested grapes are eligible for claims, and tainted fruit can’t be sold for other uses such as animal feed. It has to be destroyed if they want to claim, which adds harvesting and disposal costs for a crop with no value.

Federal crop insurance in the US has tools aimed at both problems. Its Yield Adjustment provision lets growers whose yields fall sharply substitute a higher figure in their production history, limiting how much one bad year drags down their insured yield. US grape growers can also buy a Fire Insurance Protection Smoke Index endorsement, which pays when a minimum number of smoke events hit their county, though an individual vineyard can still have losses that don’t trigger a payment.

Private cover gaps too

The problems aren’t limited to government programs. Kubek’s private insurer declined to cover the closure of his tasting room for several weeks as a business interruption, telling him he could still sell wine online and wholesale, Business in Vancouver reported.

The wider effects are spreading. Gill said some wineries have cancelled contracts with growers because they can’t afford their usual volumes. Wine Growers British Columbia has described the industry as facing a triple blow of lost grapes, cancelled contracts and fewer tourists.

The province’s Ministry of Agriculture and Food declined to comment last month, citing caretaker rules during an election campaign.

For agricultural brokers, the Okanagan dispute shows how production coverage based on past yields can leave clients underinsured after a run of losses. Brokers working with vineyards and wineries should help clients understand their actual probable yield and coverage level before the next fire season. They should also review private policy wording on business interruption, especially conditions that let insurers point to alternative sales channels, and check for gaps in inventory and contract cancellation cover.

Source - https://www.insurancebusinessmag.com