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Earthquake insurance

While British Columbia and Quebec are most commonly cited as areas of high earthquake risk, the reality is that all provinces in Canada have some degree of risk. In fact, there have been earthquakes in both Ontario and Manitoba in the past few years.

While most provincial governments have Disaster Financial Assistance Programs, these programs only provide support for damage caused by uninsurable disasters. Examples of uninsurable disasters include coastal flooding and groundwater seepage. Damage from an earthquake, on the other hand, is insurable and therefore is not eligible for the program.

There are many steps you can take to prepare for an earthquake. That said, the only way to financially protect your family and home against earthquake damage is to buy earthquake insurance. In Canada, most home insurance providers give you the option of adding earthquake insurance to your policy. To learn more about earthquake insurance, review the information provided below.

Learn how you’re protected with Square One

Does home insurance cover earthquake damage?

Traditional home insurance policies do not cover loss or damage caused by earthquakes; instead, you must specifically request that earthquake insurance be added to your policy. That’s assuming your home insurance provider offers earthquake insurance. If yours doesn’t, shop around. There will be an additional premium to add this coverage to your policy. It’s also important to note that earthquake insurance typically has its own limit of insurance and deductible.

Square One offers earthquake coverage on all home insurance policies. And, you get one of the most comprehensive policies with us.

What does earthquake insurance cover?

Earthquake insurance covers loss or damage caused by the tremor or shaking from an earthquake. It does not cover loss or damage caused by landslides, snowslides or other forms of earth movement. Nor does it cover loss or damage caused by tsunamis or tidal waves, even if the tsunami or tidal wave was due to an earthquake.

If you own a house, your earthquake insurance will typically cover loss or damage to your building and your personal property. It can also cover any additional living expenses you incur if you’re unable to live in your home while it’s being repaired.

If you own a condo, your condo (or strata) corporation is responsible to insure the building. But to cover your personal property and additional living expenses, your individual condo policy must include earthquake insurance. It may also cover assessments made against you because of a shortfall in your condo corporation’s insurance.

And if you rent your home, earthquake insurance on your tenant policy will typically cover your personal property and additional living expenses.

How much does earthquake insurance cost?

The cost to add earthquake insurance to your policy is based on the limit of insurance and on the deductible you select. The higher the limit of insurance and the lower the deductible, the higher the cost will be. The cost will also depend on where you live and the type of home in which you live. The annual cost of earthquake insurance could be as little as $25 per year. Of course, the cost could be much more depending on your needs.

For example, a house in BC insured for $300,000 with $210,000 in personal property and $75,000 in additional living expenses would have an earthquake insurance cost ranging from $225 to $515 per year. In comparison, the same house in California with half the coverage for personal property and additional living expenses would have an earthquake insurance cost of $865 per year.

What is the deductible for earthquake damage?

There is almost always a separate deductible for earthquake damage. This deductible tends to be much higher than your standard policy deductible. This is because earthquakes happen less frequently than other types of losses, but when they do, they have the potential to cause significant damage to many homes.

Your earthquake deductible may be expressed as a percentage of the limit of insurance. For example, if you have $100,000 of coverage for personal property with a 5% earthquake deductible, you will be responsible for the first $5,000 of damage incurred.

Will insurance companies be able to pay?

Each year, there are numerous earthquakes and other disasters around the world. Insurance companies factor this into their prices, building reserves to pay for the claims resulting from those disasters. In addition to these reserves, there are a number of other things that help ensure insurance companies are able to meet their commitments:

  • Insurance companies buy catastrophe protection from reinsurance companies. This helps spread the risk (and cost) of disasters globally.
  • Insurance companies are heavily regulated by both provincial and federal governments. Among other things, these governmental bodies supervise the solvency of companies.
  • Insurance companies are required to be members of the Property and Casualty Insurance Compensation Corporation (PACICC). If an insurance company fails, PACICC will automatically respond to all valid claims for participating members. PACICC can be compared to the Canadian Deposit Insurance Corporation, which protects your savings in case a bank fails.