The myths surrounding earthquake disaster relief and earthquake insurance may result in reliance on government assistance, but because earthquakes are an insurable hazard, earthquake insurance is needed to mitigate the risk of financial loss. In BC, fire insurance covers fire from any cause including earthquake generated fire but insurance companies are lobbying to exclude earthquake fire from standard fire insurance.
“If there is a major disaster and we lose everything…
the government will step in to bail us out!”
In the event of a catastrophe anywhere in Canada the federal government will provide financial assistance to the provincial or territorial government affected. This program is administered by Public Safety Canada.
Disaster Financial Assistance Arrangements (DFAA)
They look to the province or territory to spend these funds on important institutions and infrastructure and to support individuals and businesses that have suffered loss.
However, any funds disbursed by the local government will be according to the set of rules established by the province or territory, and there are exclusions.
Specifically, if an expense could be insured, repairs or relief are not eligible for reimbursement.
“Well then… the province will bail us out… won’t they?”
To help those impacted by a disaster to cope with the cost of uninsurable repairs and recovery from related property damage, the province has instituted the:
British Columbia Disaster Financial Assistance Program
This program is administered by the Provincial Emergency Program. Following a disaster those affected may apply for financial assistance with losses that could not be insured.
It must be noted that earthquakes are an insurable hazard.
Homeowners and businesses are expected to insure themselves.
Earthquake Insurance Reality #1:
The insurance industry provides earthquake insurance called “Shake” coverage.
This insurance will cover damage done by the actual destructive shaking of a structure that causes a complete or partial loss of the property.
What most people do not realize is that because of modern building codes and construction techniques, most structures will survive usual earthquake events in the mid-magnitude range, but damage may still be considerable, and most of these “Shake” policies come with a usual 10% deductible.
That means on a half million dollar property, the first $50,000 will come out of our pocket.
Further, the greatest risk to property caused by an earthquake is the fires that always follow!
The “San Francisco Earthquake and Great Fire” destroyed the city in 1906. Kobe, Japan following the 1995 earthquake lost 8,000 buildings to in some cases massive fires that followed that earthquake.
There is good news for British Columbians in that “Fire Insurance”, as a matter of provincial law automatically covers “fire from any cause” including blazes that follow an earthquake.
The insurance industry has lobbied hard to have earthquake-caused-fires to be excluded from standard fire insurance, claiming that following a quake there just won’t be enough money in the pool to cover all the losses.
During the past 10 years the province has resisted attempts by the insurance industry to have changes made to this important protection for consumers.
If the insurance companies are this concerned about the risks of earthquake fires here, shouldn’t we be just as concerned?