Earthquake insurance might not be the first thing that nudges a homeowner’s mind while purchasing a new home, but it’s not something that should be overlooked. While earthquakes aren’t a frequent natural phenomenon, they can have devastating effects on your property.
According to an analysis commissioned by the Insurance Bureau of Canada (IBC), British Columbia experienced as many as six earthquakes measuring 7.0 to 8.0 on the Richter Scale. Additionally, a couple more areas in BC experienced earthquakes of magnitudes greater than 8.0 on the Richter Scale.
Continue reading to learn if earthquake insurance is the right choice for you.
If you are interested in earthquake coverage, check out Surex for various home and earthquake insurance policies that cater to your individual requirements. They can also answer any questions you have about earthquake insurance and earthquake insurance deductible fees.
What is earthquake insurance?
Standard home insurance generally protects against home-related perils, such as fire (might not be included in some instances), theft, and even storm damage (damage to property due to a tree branch falling over).
However, damage and devastation to your property due to earthquakes are not included in your standard coverage. Situations such as these demand earthquake insurance for additional security of your property.
Earthquake insurance covers the damage due to seismic activity such as cracks in the foundation, destruction of the walls in your house, damage to other contents inside your house, etc.
Moreover, it also gives additional coverage, including:
- Fire following the earthquake: Fire due to gas-line breakage or electrical malfunction after the earthquake
- Landslide: If your house slips into a sinkhole
- Additional living expenses: Covers your day-to-day expenses while you wait for your home to get repaired
Note that the coverage and benefits of your policy might vary from one scheme to another. Generally, earthquake insurance doesn’t cover your house from floods, even if they are an aftermath of the earthquake.
Do you need earthquake insurance?
In the same IBC study, researchers suggested a 9.0 magnitude earthquake hitting British Columbia would lead to devastating outcomes that might cost around 75 billion dollars. Although earthquake-prone areas only cover a small portion of the Great White North, these areas are inhabited by 40% of Canadians.
Government studies and surveys forecasted that by 2054 — the next 34 years — there is approximately 12% to 21% risk of a 7.0 magnitude earthquake hitting Vancouver and Victoria, respectively. There is also a 5% to 15% risk that a structurally damaging earthquake might hit the St. Lawrence River region, encompassing Quebec City, Montreal, and Ottawa.
A 7.0 magnitude earthquake will incur only minor damage to a well-designed and quality building. However, the damage can be significant in poorly engineered residential and commercial structures.
Needless to say, damages caused by earthquakes will almost always be much worse than fire or any other natural disaster. Additionally, your homeowner policy doesn’t cover damages caused by earthquakes, making earthquake insurance all the more important.
What is an earthquake policy deductible?
While buying an earthquake policy, you’ll need to pay special attention to earthquake insurance deductibles. Deductible constitutes the amount of money you will have to pay from your own pocket before the earthquake insurance policy kicks in.
Your earthquake deductible insurance fee (in most cases) is based on a specific percentage of the overall insurance scheme limit.
Five things you should know about earthquake insurance deductibles
Before buying any earthquake insurance, make sure you discuss the deductibles in length with your insurance broker or agent.
Earthquake policy deductibles have a certain range
The deductible for an earthquake insurance policy can range from 2% to 20% of the coverage threshold. Say you purchase an earthquake insurance policy for $100,000 with a 10% deductible rate. In that case, your deductible amount would be $10,000.
Different components in your home can have separate deductibles
Various insurance schemes offer various protocols for deductibles. Separate components of your home might attract separate deductibles. Your entire home, additional interior work (chandeliers, glass fittings, etc.), your belongings and exterior elements such as fencing detached garages may all have their own individual deductibles.
Earthquake deductibles are higher than you think
Almost every policy’s deductibles are a modest percentage of the entire coverage amount, including the homeowner policy. However, earthquake insurance deductibles are generally much higher than any other generic policy.
This is mainly because the devastation caused by earthquakes is catastrophic. A higher deductible may make you not file a claim for the earthquake insurance since the wreckage caused by the earthquake may not be greater than the deductible — a positive for the insurance company.
Getting a professional damage inspection is recommended
Say, after careful consideration, you have concluded that the cost of repairing your residential property is less than your deductible. Still, it is recommended you inform your insurance agency or broker about the damages, primarily because qualified professionals will carefully examine your home for concealed structural and cosmetic damage.
Compare quotes and deductibles before finalizing the purchase
Insurance policy premiums and deductibles vary from one region to another. For example, the premiums and deductibles in Toronto are much lower than in British Columbia (an earthquake-prone zone). That said, don’t settle on the first quote of the first insurer you get; compare different quotes to get the best deal.
There’s no doubt that earthquakes are devastating — even the seemingly insignificant ones! Overlooking safety measures after the earthquake is over will cause further damage to life and property.
So, what safety protocols should you follow after an earthquake?
- Examine your home for structural damage to ensure it’s safe, and there are no potential detached or hanging structures that might injure you. If you are unsure, wait for professional help to arrive.
- Don’t turn off utilities unless the tremors have impacted them.
- Ensure there’s no gas leaks before using fire or turning on the electric lights.
- If you suspect any nearby water pipe wreckage, refrain from flushing the toilet.
- Be aware of your surroundings, especially debris and broken glass, as they can easily injure anyone.
All in all, if you live in an earthquake-prone zone, getting an earthquake insurance policy is a must. Remember, precaution is better than cure!