Haris Ashley
Earthquake insurance is an important consideration for homeowners and renters in British Columbia (BC), Canada. The province is located in a seismically active zone, with the Pacific Coast region being the most earthquake-prone area in the country. While earthquake insurance is not a requirement for homeowners, it is highly recommended for those living in high-risk areas, especially along the coast. The cost of earthquake insurance varies, but it typically involves a high deductible and premium due to the potential for significant damage to properties, which can include cracked foundations, roof collapse, and landslides.
| Characteristics | Values |
|---|---|
| Cost of earthquake insurance | Varies based on risk. |
| Deductible | Typically between 2-20% of total damages. |
| Risk of earthquake in BC | 30% chance of a significant earthquake in the next 50 years. |
| Coverage | Direct physical loss or damage to property, home repairs, replacement of damaged items, additional living expenses. |
| High-risk areas in BC | Along the Pacific Coast, especially the west coast. |
| Home insurance coverage | May cover damage caused by fire, explosion, and smoke after an earthquake. |
| Older homes | Higher risk of damage, may need retrofitting. |
| Additional coverage | "Earthquake Deductible Buyback/Buydown" insurance can reduce deductible costs. |
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What You'll Learn
Earthquake insurance in BC: what's covered and what's not
Earthquake insurance is not included in most home insurance policies. However, if you live in an earthquake zone like British Columbia (BC), it is recommended to add earthquake coverage to your home insurance policy. This can be done by purchasing it as an add-on from your current insurance provider or by switching to a new insurance provider that offers earthquake coverage.
What's Covered:
Earthquake insurance covers direct physical loss or damage to your property caused by an earthquake, such as the damage or destruction of your home's foundation. It also covers 'Fire Following', meaning that if a gas line breaks as a result of an earthquake and causes a fire, you are protected. If your house is built on sandy soil, your insurance may also cover landslides and liquefaction, which could cause severe foundation problems. Additionally, earthquake insurance covers additional living expenses if the policyholder is unable to live in their home while it is being repaired.
What's Not Covered:
Earthquake insurance typically does not cover damage caused by floods, tidal waves, sinkholes, or tsunamis. It also does not cover damage to land value, such as when an earthquake makes your land less valuable, or damage to vehicles or other equipment.
It is important to note that earthquake insurance deductibles can be high, ranging from 2-20% of your property's value, and the cost of insurance varies based on location, risk, and coverage needs.
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How much does earthquake insurance cost in BC?
The cost of earthquake insurance in British Columbia (BC) varies based on your risk. If you have a $300,000 house, you can expect to pay between $6,000 and $60,000 out of pocket, with the deductible range depending on the structure, age, and location of your home. Earthquake insurance is not included in most home insurance policies, so you may need to consider a new insurance provider that offers earthquake coverage.
It is recommended for BC homeowners to have enough earthquake coverage to replace their home and its contents. This is especially true for those living along the coast, as the Pacific Coast in BC is the most earthquake-prone region in Canada. In the past 70 years, the offshore region to the west of Vancouver Island has experienced more than 100 earthquakes of magnitude 5 or greater.
High deductible and premium costs are standard for earthquake insurance when you're in a high-risk zone. However, you're paying for coverage for significant damage, such as foundation cracks, roof collapse, or landslides. A broker may be able to negotiate a lower premium if you can detail how your property is less likely to sustain damage from an earthquake. For example, if your home is a newer build with reinforced concrete or a steel frame.
Several companies in BC offer "Earthquake Deductible Buyback/Buydown" insurance, which can help reduce the cost of your deductible. This type of insurance typically costs around $500 per year to cover a $100,000+ deductible.
While earthquake insurance may be expensive, it is essential to consider the potential costs of not having coverage. In IBC's study, researchers suggested that a 9.0-magnitude earthquake hitting British Columbia could result in total damages of about $75 billion. There is also a chance that a magnitude 7.0 earthquake could hit Vancouver or Victoria in the next 34 years, with a 12% and 21% chance, respectively.
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Is earthquake insurance mandatory in BC?
Earthquake insurance is not mandatory in British Columbia (BC), Canada. However, it is recommended for homeowners and tenants in BC, especially those living in high-risk earthquake zones like the Pacific Coast, also known as the Queen Charlotte Fault, which has experienced over 100 earthquakes of magnitude 5 or greater in the past 70 years.
The cost of earthquake insurance varies based on your risk, with those in high-risk zones facing higher premiums and deductibles. According to government studies, there is a 12% chance that Vancouver and a 21% chance that Victoria will experience a magnitude 7.0 earthquake within the next 34 years. The Insurance Bureau of Canada also estimates a 30% chance that BC will experience a significant earthquake in the next 50 years.
Earthquake insurance typically covers the cost of repairing or rebuilding your home, replacing personal property, and additional living expenses if you need to move out during repairs. It is important to note that earthquake insurance does not cover damage caused by floods, tidal waves, sinkholes, tsunamis, or damage to vehicles or other equipment.
When considering earthquake insurance, it is recommended to evaluate your perceived risk of an earthquake, the quality of your home's structure, and your financial situation in the event of a catastrophic event. Additionally, you can purchase "Earthquake Deductible Buyback/Buydown" insurance, which is a separate policy that reduces the cost of your deductible.
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Pros and cons of getting earthquake insurance in BC
Pros
- If you live in an earthquake zone, earthquake insurance can provide financial protection in the event of a seismic event. This includes covering the costs of home repairs, foundation repairs or rebuilding, and replacing damaged personal items.
- Earthquake insurance can help with living expenses if you need to temporarily live elsewhere while your home is being repaired or rebuilt.
- If you have a mortgage, your lender may require you to have earthquake insurance as a condition of the loan.
- If you live in a high-risk zone, earthquake insurance can give you peace of mind and financial security in the event of a disaster.
Cons
- Earthquake insurance can be expensive, with high premiums and deductibles. The cost of insurance varies based on your location, property, and the risk of an earthquake in your area.
- Earthquake insurance may not be necessary if you live in a low-risk area or if your home is newer and built to modern seismic standards.
- Earthquake insurance typically doesn't cover all types of damage, such as damage caused by floods, tidal waves, sinkholes, tsunamis, or damage to vehicles or land value.
- Some home insurance policies may already cover some types of earthquake damage, such as fire, explosion, and smoke damage, making additional earthquake insurance redundant.
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What are the chances of an earthquake in BC?
British Columbia is the most seismically active province in Canada, with earthquakes occurring commonly and at any time. The Intermountain Seismic Belt, running along the British Columbia-Alberta border in the Rocky Mountains, and the Queen Charlotte Fault, along the coast of British Columbia, are two of Canada's three major fault lines. The Pacific Coast in British Columbia is the most earthquake-prone region in Canada, with the offshore region to the west of Vancouver Island experiencing more than 100 earthquakes of magnitude 5 or greater in the past 70 years.
The chances of a magnitude 7.0 earthquake hitting Vancouver and Victoria in the next 34 years are 12% and 21%, respectively. There is also a 5-15% chance of a structurally damaging earthquake hitting the St. Lawrence River valley to the Ottawa Valley, including Quebec City, Montreal, and Ottawa.
The first recorded earthquake in Canada occurred in 1663 in Quebec and is estimated to have been between 7.3 and 7.9 magnitude. While some chimneys fell, most of the damage was due to landslides triggered by the earthquake. In 1700, an earthquake in the Pacific Northwest caused a tsunami, wiping out almost all the First People's community in Pachena Bay.
High-risk zones have high deductibles and premiums for earthquake insurance. The deductible for earthquake insurance is typically between 2-20% of total damages, and the range depends on the structure, age, and location of the home. For a $300,000 house, one can expect to pay between $6,000-$60,000 out of pocket. Earthquake insurance is not included in most home insurance policies, so those living in earthquake zones like British Columbia should consider adding earthquake coverage to their home insurance.
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Frequently asked questions
Earthquake insurance is not mandatory in BC, but it is recommended, especially for homeowners, as British Columbia is the most seismically active province in Canada.
Earthquake insurance covers direct physical loss or damage to your property caused by an earthquake, such as cracked foundations, roof collapse, or complete destruction of the building. It also covers detached structures like sheds and gazebos, and additional living expenses if you need to live elsewhere while your home is repaired.
Earthquake insurance typically does not cover damage caused by floods, tidal waves, sinkholes, tsunamis, or damage to vehicles or other equipment.
The cost of earthquake insurance varies depending on your location, property, and the risk of an earthquake. It typically has a high deductible and high premium, and the deductible will be a percentage of your coverage limit.
Earthquake insurance is not included in most home insurance policies, but it can be added as an optional add-on if you believe your property is at risk. Several companies in BC offer earthquake deductible buyback/buydown insurance to reduce the cost of the deductible.
