British Columbia is the most seismically active region in Canada, yet many homeowners are surprised to learn that standard home insurance policies do not cover earthquake damage.
Here is the essential breakdown of what BC homeowners need to know about earthquake insurance.
1. It is Optional (But Highly Recommended)
Earthquake insurance is not mandatory in BC, and it is almost never included in a base policy. You must specifically ask for it as an add-on (endorsement). Without it, you are responsible for 100% of the costs to rebuild your home and replace your belongings after a quake.
2. Percentage-Based Deductibles
Unlike typical insurance claims (where you might pay a flat $500 or $1,000), earthquake deductibles are calculated as a percentage of your home’s insured value.
- Common Rates: Usually 5%, 10%, or 15%.
- The Math: If your home is insured for $1,000,000 and you have a 10% earthquake deductible, you must pay the first $100,000 of damage before the insurance company pays a cent.
3. What it Typically Covers
- Structural Damage: Repairs or complete rebuilding of the dwelling.
- Personal Property: Replacement of furniture, electronics, and clothing.
- Additional Living Expenses (ALE): Pays for hotel stays and meals if your home is uninhabitable during repairs.
- Fire Following: Most base policies cover fire damage even if caused by a quake, but having the endorsement ensures there are no gaps in coverage for complex claims.
4. Critical Exclusions
- Tsunamis and Floods: Earthquake insurance covers “shaking.” Damage from a tsunami or coastal flooding usually requires separate Overland Water or Flood coverage.
- Land Value: Insurance covers the cost to rebuild the house, not the loss in market value of the land itself.
5. Special Note for Condo/Strata Owners
If you own a condo, you need to check your strata’s master policy. If the building is damaged, the strata may issue a “Special Assessment” to all unit owners to cover the building’s massive deductible. You should ensure your individual condo policy includes Loss Assessment Coverage specifically for earthquakes.
6. “Deductible Buy-Back” Insurance
Because earthquake deductibles are so high (often $50k–$200k+), some insurers offer a “Deductible Buy-Down” policy. This is a secondary policy that covers your primary earthquake deductible, reducing your out-of-pocket risk to a much smaller, manageable amount.
Sources & Further Reading:
- Province of British Columbia: Insurance and Emergency Preparedness Guide
- Insurance Bureau of Canada (IBC): Earthquake Insurance Explained
- InsureBC: Earthquake Coverage in BC – Detailed Guide