Earthquake insurance factors to think about:
- Earthquake defined
- Why it’s not purchased
- Exposure: Frequency & Severity
- Government intervention
- Insurance costs and conditions
Merriam-Webster defines earthquake as: a shaking or trembling of the earth that is volcanic or tectonic in origin; a shaking of a part of the earth’s surface that often causes great damage.
Issue: Why is earthquake insurance not purchased?
Earthquake insurance is normally not included within a standard homeowner’s, tenant’s or condo owner’s insurance policy. It is, however, generally available as optional coverage. While available, Earthquake insurance is rarely purchased in Quebec and Ontario (less than 5%). Some of the reasons cited for not purchasing the coverage include:
- Earthquakes occur infrequently and are mild in nature;
- If a major earthquake were to occur, the government would provide financial assistance;
- Earthquake insurance is too expensive.
There is a growing body of information available regarding the risk of earthquakes in Canada.
CD Howe Study:
“It recommends that insurance industry bodies, as well as federal and provincial governments, undertake awareness programs to enhance homeowners’ understanding of catastrophe risks. This should encourage Canadians to evaluate the merits of disaster insurance coverage, particularly in the Quebec City-Montreal-Ottawa corridor where such insurance penetration is far too low.”
Click here to learn more about earthquakes and earthquake insurance.