Canada has recorded more than 300 moderate to major earthquakes since 1986, yet insurance coverage for seismic damage remains strikingly low, according to a report from insurtech company MyChoice.
The lack of uptake poses a significant challenge for the property and casualty insurance sector, which must balance the potential for catastrophic loss with the need to build consumer awareness and encourage broader protection.
The most recent reminder of Canada's seismic risk came on August 19, when a 3.6 magnitude quake struck west of Victoria, Earlier this year, a 5.4 magnitude event near Sechelt and a 5.0 quake off Port Alice also shook British Columbia, underscoring the province’s status as the country’s highest-risk region. Scientists monitoring the Tintina Fault in the Yukon warn that accumulated strain could trigger an earthquake as strong as 7.5, with the potential for widespread damage.
Despite this exposure, earthquake insurance penetration remains limited. Industry data showed that fewer than half of B.C. homeowners carry such coverage, while only about 7% of homeowners in Quebec — the second most seismically active province — have protection. Misunderstandings add to the challenge, with more than one-third of Quebec homeowners believing earthquake coverage is automatically included in standard home policies, when it must be purchased separately.
The Insurance Bureau of Canada estimated that a major earthquake near Vancouver could result in nearly $96 billion in economic losses, with just $26 billion insured. In Quebec, a severe quake could generate $61 billion in damage, of which only $12 billion would be covered. These figures point to a significant protection gap, leaving governments and taxpayers exposed to potentially massive recovery costs.
For insurers, the situation raises several concerns. Low penetration limits premium inflows that could support catastrophic reserves, increasing dependence on reinsurance markets. A major quake would test reinsurance capacity and pricing, with consequences for the affordability and availability of coverage in Canada. Persistent misconceptions also present a reputational risk for insurers and brokers, reinforcing the need for stronger consumer education. At the same time, regulators may step in with disclosure requirements or consider market interventions if coverage levels remain low.
Matthew Roberts, COO of MyChoice, noted that the sporadic nature of seismic events often leads homeowners to underestimate the risk. He said history shows such quakes will happen again and that preparation through both structural measures and proper insurance coverage is essential.
For the industry, addressing this protection gap will require balancing product design, pricing and outreach. Without broader adoption of earthquake insurance, the financial fallout of the next major seismic event is likely to extend well beyond the sector to governments and households alike.
