Earthquakes strike without warning – and when they do, the damage is fast and costly. In Canada, certain regions face higher seismic risk, but the reality is: no area is immune. The financial and emotional toll on home and business owners can be severe, especially for those who are unprepared. If you own property in a high-risk zone, relying on standard coverage isn’t enough. Without the right coverage, you may find yourself facing significant repair costs, loss of income, or even displacement. Earthquakes have been occurring more frequently across parts of Canada, serving as a sharp reminder that seismic risk is growing and that preparation matters. Appropriate earthquake insurance helps with that. It’s not just about risk, it’s about readiness.
Understanding Earthquake Risks
Canada sees about 5,000 earthquakes annually. While many are small, past events prove that when a major earthquake strikes, the impact can be catastrophic. Seismic models show there’s a 1 in 5 chance of a damaging earthquake hitting Canada in the next 50 years. The region’s most at risk include:
- Coastal British Columbia – This region is the most seismically active area in Canada due to its proximity to the Cascadia Subduction Zone, which has the potential to generate powerful earthquakes and tsunamis.
- Yukon – Located near tectonic fault lines, Yukon experiences frequent tremors, causing potential damage to buildings and infrastructure.
- St. Lawrence River and Ottawa River Valleys – These regions are less seismically active but have experienced significant earthquakes and remain vulnerable.
A large-scale earthquake can cause extensive structural damage, fires, landslides, and prolonged power outages. The cost of rebuilding can be astronomical, making preparedness and appropriate insurance coverage essential.
Standard Insurance Policies and Earthquake Coverage
Many homeowners, condo, and tenant insurance policies do not automatically include earthquake coverage. Standard policies generally cover fire, theft, and water damage, but earthquake-related damage is often excluded. Without additional coverage, property owners may be responsible for the full cost of repairs or rebuilding after a disaster.
Similarly, business insurance policies often exclude earthquake damages. If an earthquake damages a commercial property, destroys inventory, or disrupts operations, the financial impact can be devastating. Business owners should carefully review their policies and consider adding earthquake coverage to safeguard their assets.
The Importance of Earthquake Insurance
Earthquake insurance can make the difference between financial stability and significant loss after a quake. The key benefits include:
- Structural damage protection: Helps cover the cost of repairing or rebuilding your home or business after an earthquake.
- Coverage for personal belongings and inventory: Protects valuables such as furniture, electronics, and business inventory that may be damaged or destroyed.
- Additional living expenses (ALE): Covers temporary housing, meals, and other essential expenses if your home becomes uninhabitable due to earthquake damage.
- Business interruption coverage: Helps businesses recover lost revenue and cover ongoing expenses if operations are disrupted by an earthquake.
Without earthquake insurance, property owners may be left relying on limited government disaster relief, which may not cover the full extent of recovery costs.
Listen: Grant Alsop, Account Executive at Axis Insurance discusses seismic risk and earthquake insurance on The Adam Stirling Podcast.
Residential Earthquake Insurance
Earthquake insurance is available for homeowners, condo owners, and renters. Coverage varies depending on the living situation:
- Dwelling coverage: Protects the physical structure of a home in the event of an earthquake. This is essential for homeowners, as rebuilding costs can be significant.
- Personal property coverage: Covers damage to personal belongings such as electronics, furniture, and valuables. This coverage is important for homeowners, condo owners, and tenants alike.
- Additional living expenses (ALE): Pays for temporary accommodation, meals, and other living expenses if your home is too damaged to live in after an earthquake.
Condo owners and renters should check their policies to understand how coverage applies to their specific living situation. While a condo corporation may have coverage for the building itself, individual unit owners need their own policies to protect personal property and potential assessment fees.
Commercial Earthquake Insurance
For business owners, earthquake insurance is a critical component of risk management. A severe earthquake can lead to significant financial losses, making proper coverage essential. Commercial earthquake insurance typically includes:
- Coverage for business structures and inventory: Repairs or rebuilds damaged buildings and replaces lost or damaged inventory.
- Business interruption coverage: Helps cover lost revenue and ongoing expenses such as payroll, rent, and utilities if business operations are halted due to earthquake damage.
- Employee safety considerations: Provides coverage for injuries that may occur during an earthquake, ensuring financial support for affected employees.
Businesses should assess their level of risk and consult with insurance experts to ensure they have adequate coverage to withstand a major earthquake.
Beyond traditional coverage, some businesses are also exploring parametric earthquake insurance, which pays out based on the magnitude and location of a quake and not the actual damage. Others use captive insurance structures to retain and manage their own earthquake risk. These approaches can offer more control and faster access to capital, depending on the organization’s risk profile.
Learn more about Parametric InsuranceEarthquake Insurance Deductibles
Unlike standard insurance deductibles, earthquake insurance deductibles are typically calculated as a percentage of the insured value of the property, rather than a fixed amount. This means that higher-value properties may have higher out-of-pocket costs before coverage kicks in. For example, a 20% earthquake deductible on a $1,000,000 insurance limit means you’d pay $200,000 out-of-pocket before coverage applies. Importantly, this deductible is based on the limit of insurance, not the amount of the claim.
To help manage these costs, some insurers offer earthquake deductible buy-down insurance, which allows policyholders to lower their deductible for an additional premium. This can be a valuable option for those concerned about high upfront expenses following an earthquake.
“Regardless of the level of insurance coverage or rate of deductible, everyone should be aware that insurance won’t cover all the costs in the event of an earthquake. While the insurance industry plays a critical role in helping individuals and communities recover from disaster, we all must share responsibility in earthquake preparedness.”
– Grant Alsop, Account Executive at Axis Insurance | Read more in the Vancouver Sun
Preparing Your Home or Business for Earthquakes
While insurance provides financial protection, taking proactive steps to mitigate earthquake risks can help minimize damage and enhance safety. Key preparedness measures include:
- Building safety checks – Ensure your home or business meets seismic building codes and make necessary structural reinforcements.
- Securing non-structural items – Bolt down heavy furniture, water heaters, and equipment to prevent them from toppling over during an earthquake.
- Creating an earthquake preparedness plan – Establish emergency procedures, designate evacuation routes, and store essential supplies such as food, water, and medical kits.
- Regular drills and employee training – Conduct periodic earthquake drills to ensure that everyone knows what to do in the event of a quake.
The Cost of Not Having Earthquake Insurance
The financial consequences of an earthquake can be staggering. According to a FEMA study, the average annual earthquake losses in the United States are estimated at $6.14 billion. In Canada, a major earthquake could lead to billions in uninsured losses, leaving many property owners in financial ruin.
Without earthquake insurance, homeowners and business owners may have to rely on personal savings or government assistance, which may not be sufficient to cover rebuilding and recovery costs. The potential financial burden underscores the importance of having a policy that provides comprehensive earthquake protection.
Conclusion
If you live in or operate a business in a high-risk seismic zone, earthquake insurance is more than just a safety net – it’s a smart, strategic move. Standard property policies don’t cover earthquake damage, which means even a single event could result in significant out-of-pocket costs and long-term disruption. With the right earthquake coverage in place, you’re not just protecting your physical assets, you’re protecting your financial stability, business continuity, and peace of mind.
We’re here to support your earthquake risk strategy. Get in touch with Axis Insurance today.
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Grant Alsop
Account Executive Construction & Real Estate
I am Grant Alsop, an Account Executive at Axis Insurance. I joined Axis Insurance in 2016, bringing with me over two decades of experience in the insurance industry. My professional focus spans Real Estate, Construction, Manufacturing, and Hospitality, where I provide specialized risk management and tailored insurance solutions to my clients.
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