I have included earthquake insurance as part of my home insurance since 1992. In that time, I would estimate that I've paid at least $10,000 to $15,000 dollars in additional premiums for the earthquake portion of my total home insurance.
This year on my market-value $1.8M home for $1M coverage for dwelling and personal property, the cost is $633 per annum. The policy comes with a number of limitations. Further, the policy has an 8% deductible or nearly $90,000 deductible.
The policy only covers damage that happens in the first 168 hours. This is probably because during any significant earthquake there will be aftershocks. It does not insure loss or damage from an explosion directly or indirectly from an earthquake or a tsunami or theft or flood of any nature. It does not insure damage caused by your neglect to save and preserve your property and it does not cover much other damage that may be caused by other factors like snow, rain, and wind.
It's hard to figure out what it does really cover? On the West Coast, the most likely scenario during The Big One is that it is or will be raining. If your home is cracked open by shaking there will be significant damage from rain and water that may seep through a damaged foundation.
The bigger worry is that fewer than one-half of homeowners in and around Vancouver have earthquake insurance. Many of them believe that the government will come to their aid, which it won't or can't. For those with earthquake insurance, the concern is whether or not the insurance companies have enough money set aside to cover the 45% of Britsh Columbians that have insurance. I was told recently by an insurance official that earthquake insurance premiums go into general revenue rather than an earthquake fund for possible future damage claims.
In California, earthquake insurance is organized by a quasi-government organization called the California Earthquake Authority that does set money aside for future claims. Unlike Britsh Columbia, California has experience with earthquakes, earthquake damage, earthquake insurance and the impact on housing markets when there is no earthquake insurance available.
British Columbia has yet to test all these realities: earthquake, earthquake damage, earthquake insurance claims. uninsured expectations from government and the impact on the housing market. It could be a real wake up call
In Quebec, a known earthquake zone only 5% of homeowners have insurance.
For our economy the greatest risk is businesses that do not have adequate insurance and disaster recovery plans. Many of us rely as much on private businesses as we do in the government. Disruptions from earthquakes could imperil many of the pharmacies, grocery stores, gas stations and other businesses that we have come to relyon.
by Diarmuid O'Dea