While Canada’s east coast was preparing for Hurricane Sandy, the west coast was dealing with its own natural disaster. A 7.7 magnitude earthquake rippled through the island Haida Gwaii, just off the coast of northern British Columbia, which in turn created warnings of tsunamis. While there was limited damage from the quake and its aftershocks, it has nevertheless spiked interest in earthquake insurance for many BC homeowners.
Lindsay Olson, a spokesperson for the Insurance Bureau of Canada (IBC) says events like the earthquake often augment interest in earthquake insurance. “Every time there's a bit of a rumble, we do see more uptake if you will, from the public in terms of looking at earthquake insurance.”
The reasons, according to Jason Vander Zalm with Square One Insurance, are that many homeowners assume earthquake coverage is included in their home insurance policies. It is only when an earthquake unnerves a high risk area that people begin asking questions. Vander Zalm says that people don’t realize earthquakes are insurable, and that the government won’t pay for the damages.
“They believe that the government will step in if there’s a major catastrophe and the government is going to somehow magically compensate the public if something happens to their homes.”
Vander Zalm says people may not pay for the extra coverage because the cost increases based on where you live. The closer your home is to a high, earthquake-prone area, the higher premium you will be required to pay. BC residents living closer to the coast, or on Vancouver Island, generally will pay higher earthquake premiums than residents living in the interior, near the Rocky Mountains.
The rates are determined using information from the Geological Survey of Canada. The institution uses an example of a BC home insured for $300,000. An annual premium for earthquake coverage would cost between $225 and $485, depending on where the home is located.
Vander Zalm also advises homeowners to note that earthquake insurance covers damage resulting from the earthquake itself, and not any tsunamis that may be associated with the quake.