Protect Your Home With Earthquake Insurance
Read about why you should seriously consider home insurance coverage for earthquakes.
Earthquakes are rarely at the top of an Ontario homeowner’s mind when considering the perils that home insurance need to cover. And why would they be, considering earthquakes are a rarity in Ontario? The strongest earthquake ever to hit Ontario measured at a paltry 5.6 on the Richter scale and occurred in 1935.
But consider the following:
- While the majority of Canadian earthquakes take place along the coast of British Columbia, the second largest at-risk area is the region between Southwestern Ontario and Québec, running from the St. Lawrence River Valley to the Ottawa Valley.
- According to an impact study by the Insurance Bureau of Canada, 40% of the national population lives within these two main seismic zones.
- Geological surveys suggest a 5% to 15% chance that a major earthquake capable of structural damage will hit the Ontario/Québec zone in the next 50 years. This region was actually the location of one of the strongest earthquakes in Canadian history.
- In 2010, a 5.0 earthquake hit Ontario, with an epicentre about 56 kilometres from Ottawa. It was considered moderate, but still did some damage to local buildings — in particular, shattering windows and damaging older brick work. That it didn’t measure higher and cause more damage was just as much an act of God as the earthquake itself — and it could have just as easily gone the other way.
For these reasons, you should consider adding earthquake insurance to your home insurance coverage.
Home insurance coverage against earthquakes
As you’d probably suspect, earthquake coverage is not part of your basic home insurance package, so this protection is considered an add-on. After an earthquake, insurance will compensate:
- Repairing damage to your home
- Repairing damage to extended structures on your property (like a pool)
- Repairing or replacing damaged or lost belonging
- Covering living expenses if your home is uninhabitable
Keep in mind that earthquake insurance specifically covers damage done by the earthquake itself. If the disaster triggers a fire or flood, those occurrences won’t be covered. Likewise, as a type of home insurance, it won’t cover damage to vehicles or the land beneath the building.
It’s likely that your other insurance policies will come into play in the event of a large-scale earthquake. Homeowners insurance will cover fire or explosions, comprehensive car insurance will cover damage to your vehicle, and flood insurance will pay for water damage if there is any as a result of the earthquake.
Always ask your insurance provider what’s included in their earthquake policy, as it can vary depending on where you live and how at-risk you are.
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How much does earthquake insurance cost?
As an add-on, earthquake home insurance will affect the price of your monthly premium. The most important factor that determines this fee is where you live. The more at-risk you are, the higher your premium will be. In Toronto, it costs approximately $15/month, but in Montréal, it rises to $178 and hits $332 in Vancouver.
Besides location, your premium will also depend on the age of your home, how many stories high it is, the coverage limit you take (based on the rebuild value of your property) and your deductible.
It's important to note that not all home insurance companies offer coverage for damage caused by earthquakes. Reach out to your provider for details on what your policy can cover.
What you need to know about earthquake insurance deductiblesDeductibles for earthquake coverage act as a percentage of your coverage limit. This is usually around 5% to 20%. What you’re really asking is whether you can afford to completely rebuild your house and replace your most valuable belongings without insurance.
With the average Canadian home at around 1792 square feet, and the average cost of building a house in the Ottawa region at $120 to $200 per square foot, rebuilding could be between $215,000 and $358,000.
You may notice that even on the low end, paying 5% of that value is a deductible of over $10,000. Given the high deductible, it may not be worth utilizing your policy for moderate earthquakes.
But if a major one turns your life upside down, you may consider opting into a higher deductible you know you can afford when the time comes, and lower your premium in the long run.
As a homeowner living in an at-risk zone, your decision will likely come down to whether the monthly premium is worth the peace of mind this coverage brings you.