Insurance

May 15, 2025 Published by British Columbia Chapter - By Joshua Ocampo

If an Earthquake Strikes, Are You Adequately Insured?

From CCI BC Strata Connection Magazine, Volume 04, Spring/Summer 2025

Living in British Columbia means being prepared for the unexpected, including earthquakes. The 5.4 magnitude earthquake that recently shook southern BC reminds us that we live in a geologically active region. It’s also a gentle reminder of the need for earthquake insurance and how it can protect both Strata corporations and individual homeowners from potential financial losses.

Earthquake insurance is essential for BC’s Strata corporations to manage the risk from the region’s high level of seismic activity. Although this insurance is not required by the Strata Property Act, it is highly recommended and nearly all strata corporations in the province have this coverage. However, only about 45% of homeowners include earthquake insurance in their policies, highlighting the need for awareness and action on personal coverage.

Earthquake Insurance 101

As owners in a Strata corporation, there are two traditional ways to manage financial risk in the event of an earthquake: your Strata's insurance policy and your personal insurance policy.

Strata Insurance Policy

This policy covers the physical building, including common areas and assets, from direct damage caused by an earthquake, subject to a deductible. Earthquake coverage should also include protection for landslides caused by an earthquake.

To be adequately covered on your personal insurance policy, it’s important to make sure you have the latest Strata insurance summary document, which includes the current earthquake deductible. This information is vital when obtaining the second important component of adequate coverage — your personal policy.

Personal Insurance Policy

Even if you have earthquake coverage in your Strata policy, there is a need to protect your personal property and possessions. Your strata’s policy will not cover all potential losses, so securing additional protection is strongly encouraged. Here are some considerations:

Personal Contents

For additional peace of mind, your personal contents such as your furniture, electronics and other possessions like dishes and cookware should include earthquake coverage.

Betterments and Improvements

If you have installed new flooring, updated your kitchen or made any other improvements to the unit, they should also be included under your personal policy.

Earthquake Deductible Assessment Coverage

This coverage ensures owners don’t have to pay out of pocket for their portion of an earthquake deductible assessment. The wording on an owner’s policy varies depending on the insurer but it is typically listed as “deductible assessment coverage” (they must have earthquake coverage for coverage to be triggered) or “strata deductible coverage.” Each owner’s personal insurance provider will be able to confirm whether they have adequate coverage in place.

Additional Living Expenses

Finally, to be fully protected, your personal policy should include coverage for any additional expenses for alternative accommodations while your property is being repaired as the result of an earthquake.

Understanding Earthquake Deductibles

Earthquake coverage typically comes with higher deductibles compared to other types of insurance, and the deductible is calculated differently. These deductibles are generally based on a percentage of the total insured value of the property, usually ranging from 5% to 20%. To illustrate how the deductible works, consider this scenario: Imagine a 50-unit strata complex valued at $60 million, with a 15% deductible for earthquake coverage. If the building is destroyed by an earthquake, the deductible would be 15% of the $60 million valuation, which equals$9 million. The $9 million deductible would then be divided among the 50 owners based on their unit entitlement. On average, each owner's share would be approximately $180,000. However, the actual amount can vary depending on the size and floor space of each unit.

For Strata corporations with multiple buildings, most policies apply the earthquake deductible to all buildings, however, it can also be applied by each building.

For example if only one of the buildings was damaged by an earthquake, depending on the policy the deductible would only be 15% of that building’s total valuation.

Furthermore, it is important to understand how the deductible is applied in a claim. Often, aftershocks follow an earthquake and can cause additional damage. Usually, policies consider aftershocks occurring within a certain period following an earthquake as part of the same insurance claim, meaning only one deductible applies.

Quick Tip:

Don’t forget to ask about earthquake deductible buydown options! You may be able to buydown the deductible for a premium to minimize exposure for the owners.

How to Prepare for a Quake

The Insurance Bureau of Canada provides a checklist of how to prepare for an earthquake and its outcome. Simple preventative precautions include making sure that cupboard doors are secured to prevent contents from spilling, water heaters are strapped down and other tall furniture is safely secured to avoid it from falling over. It is also important to know where the gas and water shut offs are located, and then how to turn them off.

Households should have a safety plan in place in the event of an earthquake, have emergency rendezvous locations if family members are at work or school, and even have a ‘go bag’ that could sustain you for at least 72 hours with clothing, water and emergency supplies (such as a radio and batteries) and key documents. Depending on the scale of the quake, it could take emergency services and other assistance many hours — and even days — to arrive.

Other important considerations include having a safe space to shelter (under a heavy desk or table) during the initial shake and subsequent aftershocks. Fire extinguishers should also be in an accessible place in the event of a fire in the aftermath.

An Insurance Check-up

Earthquake insurance isn’t necessarily top of mind for many people. We have been more focused on catastrophic weather events and wildfires over the past few years. Still, many say that in southwestern BC, the issue around an earthquake is not if, but when it will happen. Strata corporations need to factor this into their risk management strategy and to safeguard their property. It’s important to talk to a broker about coverage and how to manage deductibles to limit any worry or stress.

Five Tips to Get Earthquake Ready

• Ensure Earthquake Insurance Coverage: Make sure both your strata corporation and personal insurance policies include earthquake coverage to protect against potential financial losses.
• Understand Your Strata Insurance Policy: Know what your strata insurance policy protects, including coverage of damage to the building, and whether landslides caused by an earthquake are covered. It is important to know whether there are any limitations to the timeframe — usually measured in hours —relating to the occurrence of aftershocks. Normally, if subsequent tremors and aftershocks occur and cause additional damage within a fixed number of hours they are considered as part of the original event, but after a set time they may be counted as a separate claim. Check the details of your particular policy.
• Personal Insurance Considerations: Secure additional protection for personal contents, betterments and improvements, earthquake deductible assessments, and additional living expenses.
• Prepare for Earthquakes: Follow safety precautions such as securing furniture, knowing gas and water shut offs, having a safety plan, and keeping a 'go bag' at the ready with emergency supplies.
• Regular Insurance Check-ups: Regularly review your earthquake insurance coverage with a broker to ensure you are adequately protected and understand how deductibles are managed.

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Joshua Ocampo, Senior Vice-President, Team Leader BFL Realty Insurance Services

Joshua Ocampo has been with BFL CANADA for over 15 years, leading a growing team that serves some of BC’s largest real estate clients. His leadership, industry involvement, and dedication to clients and colleagues have earned him a strong reputation across the industry.