It’s coming! Ya, right… They keep saying… it’s only a matter of time until the ‘big one hits‘ on the West Coast of BC.
A lot of mortgage lenders may even require that you have Earthquake Coverage as part of your house insurance policy. There is sometimes some ambiguity about requirements and policy, so we wanted to drop a few critical pieces of info about earthquake insurance.
Of course, if this doesn’t answer your questions, please call us today.
What Is Covered Under Earthquake Coverage?
Technically, earthquake insurance covers property loss or damage caused by the tremors or shaking from an earthquake. It does not include landslides, snow slides, tsunamis, or tidal waves, even if the tsunami was due to an earthquake. That’s the tricky part; the quake may have triggered a landslide or ocean surge, but none of the subsequent damage due to these events is covered. It pays to ask!
Does My Policy Cover Earthquake Automatically?
Earthquake Coverage is an additional endorsement that is optional, and a standard property insurance policy does not include this coverage.
For home insurance policies, when a customer receives a quote from a company with Earthquake Coverage, it can include coverage on the Dwelling/Outbuilding or the Dwelling/Outbuilding and Contents.
For Condo or Tenant Insurance policies, you may purchase Earthquake Coverage on the contents only.
Is Earthquake Coverage Expensive?
The Earthquake Coverage expense can vary depending on the risk area you live in. The higher the risk of an earthquake, the higher the rates.
Most companies add Earthquake Coverage with a deductible. This means you will pay a percent in an earthquake age to replace your dwelling or contents. The deductible amounts tend to be much higher than the standard policy deductible because they are less likely than other types of losses, but when they happen, they can cause much more damage than other perils. Companies offer varying deductible options depending on where your home is, from 5%, 8%,10%, and 15%, to help balance premiums.
How Do I Know If My Insurer Can Pay Out My Claim?
The ability of insurance companies to pay out catastrophic claims resulting from earthquakes is no different than fire or another event that damages the home beyond repair.
Catastrophe Protection
Additionally, there is redundancy within the industry, referred to as catastrophe protection. Each insurance company is required to pay into the Property and Casualty Insurance Compensation Corporation (PACICC). This is sort of like insurance for the insurers. The PACICC is a non-profit organization funded by the industry to cover all claims in the event of a company collapse. This protects you so that an insurer over their head can’t just fold and relinquish all financial responsibility to their claim holders. The PACICC will step in and fund the outstanding claims.
All of our insurers are members of the PACICC, so you can rest assured if an earthquake damages your home, you will be covered.
Learn more about this umbrella company here: http://www.pacicc.ca/
Contact Us!
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