Québec and British Columbia are two provinces in Canada that are prone to earthquakes. Even residents may not know the significance of earthquakes that have been experienced in Québec, or they downplay the actual impacts. While the majority of earthquakes that occur in the province are minimal in scale (ranking at 1.0-2.9 on the Richter scale, roughly) there have been sizeable and even detrimental earthquakes in recent history ranking over 6.0. With earthquakes this scale, only earthquake-resistant structures may survive – and even those will sustain moderate damages. That said, your standard home insurance policy will generally not include earthquake insurance.

It’s a common misconception that earth movements and their resulting damages would be covered by home insurance, but the reality is that you’ll need to purchase an added endorsement to have coverage against earthquakes – known as “earthquake insurance.”

Because the damages from earthquakes can be significant, and because Québec is a zone that is prone to them, it’s a good idea to educate yourself on the benefits so that you can make an informed decision.

What is earthquake insurance?

Earthquake insurance is an insurance endorsement designed to cover the damages and losses caused to property and its contents as a result of earth movements. A standard home insurance policy may cover any resulting consequences of earthquakes, such as if the earthquake caused a fire in your home. With earthquake insurance, homeowners who cannot return to their home due to the scale of damages may be able to find solace in additional living expenses coverage.

Sadly, only about 4% of policyholders have coverage for earthquakes. This is astronomical given the weight of damages that an earthquake could cause. Non-insured losses, taken together, would create an exorbitant financial burden for the residents of Québec, and potentially the rest of the country as well.

Why are earthquake insurance deductibles different?

Most deductibles are a set dollar amount. This is true of a lot of different insurance products. With earthquake coverage, many providers will set deductibles as a percentage amount – either 5%, 10%, or 15%. That percent amount is the total value of your home, personal belongings, and/or detached private structures. (Note that extra expenses, such as additional living expenses, has no deductible.) As an example, if your home were damaged in an earthquake, and your home was covered for $500,000, a deductible of 10% would mean you were responsible for $50,000 of the repair costs.

Why are earthquake insurance deductibles so high? Well, because earthquakes are huge, large-scale events that will likely impact dozens of homes in a larger area. High deductibles mean that your loss and everyone else’s loss can be covered, while also ensuring your coverage is still affordable. It’s still a lot less than you’d pay if you opted not to purchase an earthquake insurance endorsement.

The reality of earthquakes in Canada

The GSC (Geological Survey of Canada) records and determines the location of over 4,000 earthquakes in Canada/year. Ultimately, that boils down to 11 earthquakes/day. That being said, the majority of these earthquakes are so small that the impacts cannot be felt, but within these 4,000, about 50 (or 1/week) are typically felt. Earthquakes most frequently occur along active plate boundaries, such as regions off the British Columbia Cost, in arctic margins (northern Québec and Nunavut), and along the northern Cordillera. Earthquakes occur frequently in the St Lawrence Valleys, in New Brunswick, Ottawa, and south of Newfoundland. While the province most likely to experience an earthquake is British Columbia, technically damaging earthquakes can occur in any relevant active plate areas as well.

Canada’s largest earthquake ever recorded (not including the earthquake of 1700 off west Coast of Vancouver Island, which wasn’t recorded by a seismograph) was that of an event that hit just off the Haida Gwaii on the west coast of Canada, measuring 8.1 on the Richter scale.  

A study commissioned by the IBC modelled a 7.1-magnitude earthquake in the corridor of Quebec City, Montreal, and Ottawa, and its consequential resulting damages. The costs that resulted were estimated at about $61 billion. The same study estimated the costs that would result from a 9.0-magnitude earthquake in British Columbia, and the costs chalked up to almost $75 billion. While the seismic zones that were studied in this experiment were only a small fraction of Canada’s total geographic area, roughly 40% of all Canadians live within these regions.

As you can expect, the impacts of an earthquake could be detrimental, and the non-insured losses rack up very quickly. These studies demonstrate that a significant earthquake could severely impact the region’s economy, which in turn could detrimentally impact all of Canada.

Should I buy earthquake insurance?

Earthquake insurance is optional. It’s not automatically included in a home insurance policy and few if no mortgage lenders or banks will require its purchase. However, if you live between the region of Montreal and Ottawa, you live in a hot spot for seismic activity. Residents that live in these areas that are at higher risk of earthquakes should consider adding an earthquake insurance endorsement to their policy. Quake damage can be severely detrimental to your property’s structure and foundation, and quakes measuring over 8.0 on the Richter scale have been known to cause major damage, structure destruction to even earthquake-resistant buildings, as well as severe injuries and fatalities.

If you still aren’t convinced, contact a broker to discuss the possibility of adding an earthquake insurance endorsement to your policy. LMBF is happy to go over your coverage and discuss the likelihood of experiencing seismic activity in your area, and how that translates into your potential need for this endorsement.