Acts of God and insurance: are you protected?

Risk sharing and natural catastrophes

A basic principle in insurance is risk sharing. This consists of evaluating the probability of a loss occurring and the financial consequences for each policyholder. If a loss occurs, the insurer uses the premiums collected from all its clients to compensate policyholders who suffered a loss. 

Perils covered for everyone

It’s impossible to predict where and when strong winds, forest fires, lightning, hail or tornadoes will occur. The severity of these phenomena also varies considerably: wind could blow your patio set away and damage it or cause an old tree to fall on your home’s roof and seriously damage it. These perils  are covered by most home insurance policies.

Additional coverage

The likelihood of certain natural catastrophes, such as heavy rains, floods and earthquakes, can be assessed more accurately. For example, buildings located at water’s edge are at greater risk of flooding. Some homes located in areas with compromised infrastructure are more susceptible to damage from heavy rains. 

As for earthquakes, seismic areas are mainly located in Quebec, British Columbia and the Yukon.

Adding an endorsement to your insurance policy can protect you from such losses. The corresponding premium is calculated based on the probability of an event occurring. In cases where the risk is unavoidable or extremely high, it may be difficult to obtain the coverage you want. This is particularly true for cottages or homes in areas that flood every spring due to a nearby lake overflowing.

Is it covered or not? 

Your home insurance policy details which perils are covered. Here is a complete list of perils usually covered, covered with endorsement and not covered.

Only earth movements is a natural disaster that is not insurable.