About 850,000 people in British Columbia signed up for this year’s Great British Columbia ShakeOut.
Schools, businesses, organizations and members of the public took part in the earthquake drill, practicing “Drop, Cover and Hold On,” the response emergency experts recommend to reduce injuries and deaths during an earthquake.
The BC Earthquake Alliance (BCEA) has run the annual drill since 2011, alongside similar exercises around the world. This year’s theme was earthquake preparedness fundamentals, and participants were encouraged to update their emergency plans and supplies and secure their homes and workplaces.
The Insurance Bureau of Canada (IBC), which sponsors the event, pointed to the scale of the risk.
“A significant earthquake in southwestern British Columbia is only a matter of time,” said Greg Moy, IBC’s manager of government relations for Pacific and Western Canada. He cited Natural Resources Canada’s estimate of a 30% chance of a major earthquake in the region over the next 50 years.
The drill prepares people physically, but many British Columbians remain financially exposed. Standard home insurance in Canada generally excludes earthquake damage, and coverage has to be bought as an endorsement or separate policy.
IBC has estimated that only about 50% to 65% of BC homeowners carry earthquake coverage, IB reported in April, and take-up is much lower in other at-risk regions such as Quebec.
Even those with coverage face significant costs. Earthquake deductibles are usually a percentage of the insured value rather than a fixed dollar amount, which means homeowners can be left paying tens of thousands of dollars before coverage applies. According to the BC government, strata corporation earthquake deductibles can range from 10% to 20% of the building’s full replacement value. In a major quake, many condo owners could face large special assessments.
IBC has also warned that an extreme earthquake could cause losses big enough to threaten insurers’ ability to pay. Its advocacy has called for a national earthquake backstop, noting that Canada is the only high-risk G7 country without a government-backed catastrophe insurance mechanism. No such program has been introduced.
ShakeOut week gives brokers a natural opportunity to review earthquake cover with clients. The conversation should go beyond whether a client has an endorsement to what their deductible would actually mean. A 10% deductible on a $1.2 million rebuild is $120,000.
Condo owners need particular attention. Strata deductibles and special assessments can land on individual owners, and unit owners’ policies vary in how much of that they cover. Commercial clients face similar questions about business interruption and contingent exposures if suppliers or customers in the Lower Mainland are hit.
