Earthquake Insurance

Canada has significant earthquake risk in several regions, particularly along the Pacific coast of British Columbia and in the St. Lawrence River valley in Quebec and Ontario. While major earthquakes are relatively infrequent, the potential for catastrophic damage makes earthquake insurance an important consideration for property owners in at-risk areas.

The most seismically active region in Canada is southwestern British Columbia, which lies along the Cascadia Subduction Zone. Scientists estimate there is a 30% probability of a major earthquake (magnitude 9.0 or greater) occurring in this zone in the next 50 years. Such an event could cause widespread destruction in Vancouver, Victoria, and surrounding communities.

Eastern Canada also faces significant earthquake risk. The St. Lawrence River valley and Ottawa River valley are known for periodic earthquake activity, and a major earthquake in the Montreal or Ottawa region could cause billions of dollars in damage.

Despite these risks, a relatively small percentage of Canadian homeowners carry earthquake insurance. Studies suggest that only about 40-50% of British Columbians and less than 5% of Quebecers have earthquake coverage. This gap in coverage means that many Canadians would face devastating financial losses in the event of a major earthquake.

Standard home insurance policies in Canada do not cover earthquake damage. Earthquake coverage must be purchased as a separate endorsement or standalone policy. Understanding this distinction is critical for property owners in seismically active regions.

Earthquake insurance in Canada covers damage to your home and personal property caused by the shaking, cracking, and upheaval associated with earthquakes. Here is what you need to know about how earthquake insurance works:

Coverage: Earthquake insurance typically covers damage to the structure of your home, your personal belongings, and additional living expenses if you are displaced from your home. Some policies also cover damage from fire following an earthquake, although this may already be covered under your standard home insurance.

Deductibles: Earthquake insurance deductibles are typically much higher than standard home insurance deductibles. Most earthquake policies have deductibles ranging from 5% to 25% of the insured value of your home. This means that on a home insured for $500,000, a 10% deductible would require you to pay the first $50,000 of earthquake damage out of pocket.

Premiums: The cost of earthquake insurance depends on your location, the age and construction type of your home, the coverage amount, and the deductible you choose. Premiums in high-risk areas like British Columbia tend to be higher than in lower-risk regions.

Exclusions: Earthquake insurance does not cover damage from tsunamis (unless specifically included), landslides not directly caused by an earthquake, or pre-existing damage. It also does not cover the land itself, only the structures and contents.

Important Considerations: When purchasing earthquake insurance, ensure your dwelling coverage reflects the full replacement cost of your home. Given the high deductibles, earthquake insurance is designed to protect against catastrophic losses rather than minor damage.

While earthquake insurance provides financial protection, physical preparedness is equally important for protecting your family and minimizing damage:

Secure Your Home: Bolt your home to its foundation, secure your water heater, and anchor heavy furniture and appliances to walls. These measures can prevent significant damage during an earthquake and may also reduce your insurance premiums.

Create an Emergency Kit: Prepare a kit with enough food, water, medications, and essential supplies to last at least 72 hours. Include a flashlight, batteries, a first aid kit, important documents, and cash.

Develop an Emergency Plan: Create a family emergency plan that includes meeting points, communication strategies, and designated out-of-area contacts. Practice earthquake drills regularly.

Know How to Shut Off Utilities: Learn how to shut off your gas, water, and electricity. Gas leaks after an earthquake can cause fires and explosions, so knowing how to quickly close the gas valve is critical.

Document Your Possessions: Create a detailed inventory of your personal belongings, including photographs and receipts. This documentation will be invaluable when filing an insurance claim after an earthquake.

Retrofit Older Homes: If you live in an older home, consider seismic retrofitting to improve its resistance to earthquake damage. This may include bolting the home to its foundation, bracing cripple walls, and reinforcing chimneys.

Understanding and preparing for earthquake risk is a shared responsibility between individuals, communities, and governments. Combining physical preparedness with appropriate insurance coverage is the best approach to protecting your family and your financial well-being.