Is Earthquake Insurance Worth It?

When you hear the term natural disaster in Canada, the following events likely come to mind:

• Ice and snowstorms
• Hailstorms
• Forest fires
• Floods
• Windstorms and tornadoes

Although these types of natural disasters are relatively commonplace throughout the country, Canadian homeowners should also know how to prepare for an earthquake.

A severe earthquake can cause hundreds of thousands of dollars worth of damage to a residential property. Unfortunately, standard home insurance policies don't cover earthquake-related damage — if you want to safeguard your property and belongings financially, you should consider purchasing earthquake insurance.

If you've been asking yourself questions like, "should I invest in earthquake coverage?" or "is earthquake insurance worth it if I live in Canada?", be sure to continue reading.

What is earthquake coverage?

As mentioned above, your home insurance policy doesn't automatically include earthquake home insurance coverage (even if you have all-risk home insurance). This is because earthquake coverage is an add-on. An add-on is a type of optional coverage that a homeowner can purchase and include in their policy.

It is worth noting that the average earthquake insurance deductible tends to be higher than other peril-related add-ons. Although this may not sound ideal, it actually makes the add-on more affordable in the long run. This is because add-ons with high deductibles generally require lower monthly or annual payments.

What parts of Canada are prone to earthquakes?

An earthquake could happen at any time and are much more common than you'd think. For instance, did you know that there are roughly 4,000 earthquakes in Canada every year?

However, some provinces are at a higher risk than others. The following provinces are considered to be the most at-risk areas for earthquakes in Canada:

• British Columbia
• Quebec
• Eastern Ontario
• Northwest Territories

Furthermore, recent studies have shown that certain parts of British Columbia have a 30% chance of experiencing a major earthquake within the next 50 years. Experts estimate that a severe earthquake (magnitude 9.0) could result in 75 billion dollars worth of damage to public and private property.

Although this may seem like a small fraction of the country, approximately 40% of Canadian residents reside in the areas listed above. In other words, almost half of the homeowners in Canada have a high chance of experiencing an earthquake every year.

What does earthquake coverage protect?

Earthquake coverage protects a wide range of properties. Earthquake coverage generally is used to safeguard detached homes and similar structures. However, if you own a condo earthquake insurance is also a worthwhile investment.

Additionally, earthquake coverage financially protects your precious belongings, like furniture, entertainment systems, and other valuables.

Are there any exceptions?

Yes, homeowners should be aware of a handful of exceptions and requirements if they want to be remunerated after an earthquake.

For starters, the property or item needs to be damaged by the earthquake directly, not a by-product or side-effect of an earthquake. This means that if your property or belongings gets damaged by one of the following events, you likely won't receive financial coverage:

• A fire caused by an earthquake
• An explosion caused by an earthquake
• A tsunami caused by an earthquake
• A sinkhole caused by an earthquake

Similarly, homeowners who own a vehicle should know that earthquake coverage doesn't cover earthquake-related vehicle damage. This type of damage is covered by your comprehensive car insurance.

How much does earthquake coverage cost in Canada?

Unfortunately, there's no black-and-white answer to this question.

In most provinces, earthquake coverage is relatively affordable. For instance, if you own a home worth $300,000 in a town or city that is low risk, you can expect to pay approximately $15 per year for earthquake coverage.

Although, in high-risk areas, like British Columbia or Quebec, homeowners can expect to pay as much as $332 per year for the same type of coverage. Homeowners should consider this expense before committing to the add-on.

If you're unsure if earthquake coverage is a feasible choice for you and your family, don't hesitate to reach out to an insurance advisor. An experienced insurance advisor can help you find affordable, personalized quotes from the most respected providers in the country.

Protecting your property from earthquake damage

Although there's no surefire way to ensure that your home remains unscathed after an earthquake, there are several things you can do to minimize the overall damage.

Some of the best tactics and techniques include:

• Secure your water heater with a brace
• Install latches on cabinets to prevent contents from falling
• Anchor heavy hanging mirrors or framed art pieces into studs
• Keep small, valuable belongings in a safe or off-site storage facility
• Prune trees that could fall on your home in the event of an earthquake
• Secure ceiling fans, chandeliers and other hanging fixtures
• Prepare an emergency kit (canned food, water, sleeping bag, flashlight with batteries, first aid kit, etc.)

Taking the time to do these things can drastically minimize your losses after an earthquake.

What should you do after an earthquake destroys your home?

There's no denying that losing your home to a natural disaster is a hard pill to swallow, even if you have the proper insurance.

Although losing your home is stressful, you need to do a handful of things after an earthquake occurs. Some of the most important tasks include the following:

• Make sure that your family is accounted for and safe
• Call the authorities immediately
• Refrain from entering the home until the authorities arrive
• Look for a place to stay until your property is deemed safe

Additionally, you need to submit a claim to your insurance provider after losing your home to an earthquake (if you have the proper coverage). Your provider will send an insurance adjuster to assess the damage and investigate the scene.

Failing to contact your insurance provider promptly can prolong the claim-making process and make it difficult for the insurance adjuster to assess the damage correctly.

Do you think that earthquake coverage is worth it?

We feel that, for select homeowners, earthquake coverage is necessary; but, it's up to you to make the final decision. If you have questions about earthquake coverage in Canada, you can reach out to your home insurance provider at any time. Your home insurance provider can answer any questions that you may have about this unique add-on.