Should I purchase earthquake insurance?
Our Reliance home insurance specialists don’t have a crystal ball, but we do have the knowledge and resources to help you make the best decision regarding earthquake insurance.
We start by conducting a risk assessment. First, we understand the risk and determine a cost-benefit analysis. Recently, the City of Vancouver released a map showing areas that would see the most severe damage during a significant earthquake. This is only a guideline but shows specific hotspots to help you understand your risk.
Develop a risk strategy for earthquake insurance coverage
Many Canadians are under the impression that the government will cover damages for catastrophic events. But that’s not the case. According to BC Disaster Financial Assistance, “Insurable damages in the private sector from wildfires, earthquakes, snow load, wind storms, sewer or sump pit back-up, water entry from above ground (including roofs, windows or other areas of the building), are NOT eligible for DFA.”
If your home is damaged or destroyed, you will bear the loss. Insurance is about protecting your financial investment in your personal property. By not having earthquake coverage you’re at risk of losing everything or sustaining damages to your property that you can’t afford to repair.
An earthquake endorsement usually comes with a hefty deductible, in some cases over $100,000, depending on the value of your home. The option to purchase an earthquake deductible buy down policy (EQDB) can substantially reduce your deductible.
Benefits of an earthquake deductible buydown policy
You protect your cash flow and the potential situation of being unable to afford the deductible.
- Affordable premium and deductible, making earthquake Insurance more accessible.
- Flexibility – choose a limit to cover the deductible up to $500,000, or a portion of your earthquake deductible from 10%, 5% or 3% to $2500.
- Protection of financial security should an earthquake occur.
Take stock of your risk ratio
1. Size up your risk. In BC we know what areas are most at risk for shake and water damage. Determine the risk associated directly with the type of home you are in: low-rise vs. high rise; concrete or wood; type of soil the structure is built on.
2. Assess the damage or replacement cost. The higher your risk, the more expensive the insurance. Determine if you’d want to rebuild with guaranteed replacement cost or if you’d prefer a cash settlement. Earthquake deductibles are also a percentage of your home value. There are policies available to reduce your earthquake deductible. Talk to your Reliance broker about this option.
3. Mitigate the damage before the big one. Take steps to strengthen your house or home against earthquakes by reducing the likelihood of structural damage. Inspect the inside of your home and determine what can be done to reduce internal damage to contents and interior finishes.
4. Read the fine print. Review what the policy covers with your Reliance Insurance Agent. Be aware that damage that occurs after an earthquake such as fire from broken gas lines may be covered by a standard homeowner’s policy.
5. Peace of mind. We don’t know when the big one will hit, so having earthquake insurance is worth it for peace of mind. If a catastrophic event happens, you’ll be able to recoup.
Let Reliance analyze your deductible amount before you experience a loss. We'll help you make an informed decision to protect your financial security.
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