Current home insurance policies generally include coverage for risks that may affect all policyholders,
including fire, water main break or violent winds, and this regardless where they live. So what about earthquakes?
Coverage sold under an endorsement
Earthquake coverage is sold under an endorsement. The coverage is added to the home insurance policy. This is
often the case when a small number of insured are exposed to a specific risk, which is the case for earthquakes
If you live in a region at risk or if you want to protect yourself against this type of loss, you can purchase
an endorsement to cover earthquakes. Check with your broker or insurer.
Types of damage resulting from this loss
Like other disasters, earthquakes can cause two kinds of damage:
- Damage resulting from the earthquake itself.
- Damage from fire, explosion or smoke after the earthquake.
According to an Insurance Bureau of Canada (IBC) analysis, a number of insured already have coverage for damage
caused by fire following an earthquake. For some, this coverage is included in their home insurance policy, for
others, it is added to insurance policy through an endorsement.
The IBC analysis also showed that very few individuals are insured for loss resulting from an earthquake. Some
mistakenly believe that the risk is covered under their home insurance policy. However, it isn’t.
Every individual must assess his or her risk tolerance threshold or financial capacity to assume the consequences
if such an event were to occur.
Why is the deductible higher?
Unlike other types of disaster, earthquakes are likely to cause major damage, which is why coverage is generally
To be able to offer adequate coverage at a reasonable and accessible price, insurers must charge a higher deductible.
This is the amount the policyholder would have to pay if there were an earthquake. The deductible generally corresponds
to a percentage of the amount of insurance purchased. For example, if your deductible were 5% of your insurance amount,
and that amount is $200,000, your deductible would be $10,000.