Five reasons a BC business needs stand alone earthquake insurance

There are many high risk areas in Canada for the risk of earthquakes happening.

The Juan de Fuca plate in British Columbia is the most volatile fault line in Canada. What are the implications for a business in BC to experience damage or complete destruction from an earthquake? Actually, the stats are pretty high. BC records over 500 earthquakes a year.

BC has one of the highest risk zones for the chance of an earthquake occurring. Approximately 40% of Canadians live within the two key seismic zones – BC and QC. The Insurance Bureau of Canada commissioned an earthquake study and estimated the overall costs after a 9.0-magnitude earthquake in British Columbia at almost $75 billion.

On July 22, 2020 a 5.1 magnitude earthquake shook off Tofino, BC on July 22, 2020; and in 2012 a 7.7 magnitude quake shook off the west coast of Vancouver Island. Haida Gwaii experienced the strongest earthquake recorded in Canada since the 1700’s. In 1949 a 8.0 shaker occurred, and was felt as far away as Prince Rupert.

The full report quantifies the amount of damage Canadians can expect. It demonstrates that a major earthquake will have a significant economic impact regionally as well as a domino effect on the entire Canadian economy.

Five reasons for businesses to get stand alone earthquake insurance in BC

  1. In BC we are at risk for what is known as “The Big One or Megathrust”. This relates to the belief that there is potential for an earth-shaking event of considerable magnitude that will cause serious damage, injuries, and fatalities. Vancouver Island, the West Coast of BC and Metro Vancouver are all high-risk areas.
  2. Are you in a high risk area? In 2019, CTV reported that the City of Vancouver released a map showing areas that would see the most severe damage during a significant earthquake. This is a just a guideline but shows specific hotspots. Conduct a risk assessment with your broker.
  3. What are the implications of an earthquake for the province of BC? The province of BC is due for another subduction zone earthquake. There are approximately 2500 tremors in BC every year, thus making this region highly seismic. Low-level intensity quakes – magnitude 4.0 in the Richter Scale or lower – usually go unnoticed. But BC is at risk for a megaquake because the Juan de Fuca plate is Canada’s most volatile fault line. It is a subduction zone, where one plate is being pushed under another. Earthquakes over 7.0 magnitude can cause serious damage.
  4. Stress is building up: The Cascadia Subduction Zone (CSZ) is a 1000 km fault that runs from Northern Vancouver Island to Northern California. The fault itself is a boundary between two tectonic plates: the Juan de Fuca tectonic plate is moving towards and getting shoved under the North American plate.
  5. The slow slip: In a CBC documentary by Seismologist Johanna Wagstaffe entitled “Why the risk of the ‘Big One’ in BC is heightened every 14 months”, experts agree that, “Every 14 months or so there is a sudden reversal of movement [of Vancouver island] for a couple of weeks. The plate is buckling in one direction when suddenly it settles a little bit … that little bit of extra stress triggers a rupture, which in turn causes the megathrust earthquake” (1) that is what seismologists call a “slow slip”.

PMU Specialty has a special stand alone earthquake policy.
Coverage Highlights:
– No limitations on age and location of the building
– Max Limit is $7,500,000 TIV – any one risk
– EQ Deductible – 10% to 15% (depending on risk)
– Minimum premiums begin at $6,600 and higher

Developing a risk strategy for commercial earthquake insurance coverage

Many business owners in Canada believe that the government will cover damages for catastrophic events. But that is 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 Disaster Financial Assistance.” Should your business be damaged or destroyed, you will bear the loss. Insurance is about protecting your financial investment in your property. By not having earthquake coverage you are at risk of losing everything or sustaining damages to your property and business operations.

Take stock of your risk ratio before buying earthquake insurance

  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 building you are in: low-rise vs. high rise; concrete or wood; type of soil the structure is built on. Insurance premiums vary depending on the size of building, type of building and location.
  2. Assess the damage or replacement cost. The higher your risk, the more expensive the insurance. Determine if you would want to rebuild with guaranteed replacement cost or if you will want to take a cash settlement. Also, earthquake deductibles are a percentage of your property value. There are policies available to reduce your earthquake deductible.
  3. Additional insurance converges: A business also has to consider loss of income and business interruption insurance.
  4. Mitigate the damage before the big one. Take steps to strengthen your business against earthquakes by reducing the likelihood of structural damage. Have an emergency plan in place. How will you conduct business if your property is damaged or destroyed?

Ask how we can help to cover your property

There are thousands of Strata’s, condominiums, apartments industrial and warehouse buildings in the lower mainland, especially in Richmond, Delta and Vancouver Island that have significant earthquake exposures but sadly due to their locations, many insurers do not offer earthquake insurance coverage in this regions.

Various reports indicate that anywhere from 45 – 55 % percent of British Columbians have NO earthquake insurance either due to pricing or availability.

Earthquake Resources

PMU Specialty – Stand alone earthquake

May 3, 2022 Alberni Valley News: 400 and counting: Vancouver Island epicentre of a busy earthquake month in Canada

CTV News: 5.1-magnitude earthquake strikes near Tofino; no tsunami warning in place

How to Save on Earthquake Insurance Deductibles

Frequently Asked Questions about Earthquakes

Earthquakes Canada

City of Vancouver Earthquake Preparedness Video

BC Disaster Financial Assistance

Public Safety Canada