Canada Was the Only G7 Country Without an Earthquake Backstop; Budget 2026 Changes That for B.C. and Quebec Owners
What the Proposed Canadian Earthquake Insurance Facility Does, What It Doesn't, and What to Check at Your Next Renewal
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Published: November 6, 2026, 12:47 p.m. ET
Fact-checked · , including Government of Canada, Insurance Bureau of Canada & CAA-Québec
Credit: Homeowner.ca
Key Takeaways
•Budget 2026 commits Ottawa to legislate a Canadian Earthquake Insurance Facility that could provide up to $50 billion to insurers after an extreme earthquake, funded by levies on insurers. It is a proposal, not a working program.
•The Facility is designed to keep insurers able to pay claims. It does not add earthquake coverage to your policy, lower your deductible or change your premium today.
•Most standard home policies exclude earthquake shaking damage. Owners in southwestern B.C. and the Ottawa–Montreal–Quebec City corridor should confirm whether they carry the endorsement and what their percentage deductible means in dollars.
On Nov. 5, 2026, the federal government's Budget 2026 committed to introducing legislation that would establish a Canadian Earthquake Insurance Facility, a national mechanism to manage the financial fallout of a catastrophic earthquake. The Insurance Bureau of Canada welcomed the move, pointing out that Canada had been the only G7 country with significant seismic risk and no such arrangement in place. Program details are still to be worked out.
For homeowners, the headline is easy to misread. A federal backstop sounds like protection for your house. It isn't — at least not directly. The Facility is aimed at the insurance system's ability to pay after a "big one," not at the coverage sitting in your policy documents. If you live in B.C.'s Lower Mainland, on Vancouver Island, or anywhere between Ottawa and Quebec City, your exposure tomorrow morning is exactly what it was last week.
This piece separates the two layers. First, what Budget 2026 actually commits to and what remains unresolved. Then, what a typical Canadian home policy does and doesn't cover for earthquakes, how earthquake deductibles work in dollars, and what owners in higher-risk regions should ask about at renewal.
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What Budget 2026 actually commits to
Confirmed features versus open questions
The budget language is short, but it is more specific than most early coverage suggests. According to Budget 2026's chapter on disaster preparedness, the Facility would be financed through nominal levies on insurers and would provide emergency funding of up to $50 billion to the property and casualty insurance sector following an extreme earthquake. The stated purpose is to support victims by increasing insurers' ability to pay claims and to promote financial stability.
Three further details matter. Ottawa says it would implement the Facility quickly for federally regulated insurers, while working with provinces and territories to extend access to provincially regulated insurers. The legislation would be reviewed five years after implementation to assess its effect on the earthquake insurance market. And the budget names the regions it has in mind: southwestern British Columbia and the corridor between Ottawa and Québec City.
The budget's own costing table records no amounts for the measure in 2026–27 or 2027–28, with entries beginning in 2028–29. That tells you something about the government's planning horizon. It is not a launch date, and none has been announced.
Legislation to create the Facility
Announced intention; not yet tabled or passed
Nothing is operational yet
Funding up to $50 billion to P&C insurers after an extreme earthquake
Stated in Budget 2026
Money flows to insurers, not to households
Financing through levies on insurers
Stated; levy rates not published
Any pass-through to premiums is unknown
Access for federally regulated insurers
Planned first
Depends on who underwrites your policy
Access for provincially regulated insurers
Requires federal-provincial agreement
Timing unclear for some B.C. and Quebec carriers
Trigger, retention and cost-sharing formula
Not published
No basis yet for predicting market effects
Five-year review of market impact
Stated
Ottawa itself treats pricing and availability effects as uncertain
The table is the honest summary. The architecture is visible. The mechanics are not.
The earthquake measure is one of several Budget 2026 items that touch homeowners.
The budget language is short, but it is more specific than most early coverage suggests. According to Budget 2026's chapter on disaster preparedness, the Facility would be financed through nominal levies on insurers and would provide emergency funding of up to $50 billion to the property and casualty insurance sector following an extreme earthquake. The stated purpose is to support victims by increasing insurers' ability to pay claims and to promote financial stability.
Three further details matter. Ottawa says it would implement the Facility quickly for federally regulated insurers, while working with provinces and territories to extend access to provincially regulated insurers. The legislation would be reviewed five years after implementation to assess its effect on the earthquake insurance market. And the budget names the regions it has in mind: southwestern British Columbia and the corridor between Ottawa and Québec City.
The budget's own costing table records no amounts for the measure in 2026–27 or 2027–28, with entries beginning in 2028–29. That tells you something about the government's planning horizon. It is not a launch date, and none has been announced.
Legislation to create the Facility
Announced intention; not yet tabled or passed
Nothing is operational yet
Funding up to $50 billion to P&C insurers after an extreme earthquake
Stated in Budget 2026
Money flows to insurers, not to households
Financing through levies on insurers
Stated; levy rates not published
Any pass-through to premiums is unknown
Access for federally regulated insurers
Planned first
Depends on who underwrites your policy
Access for provincially regulated insurers
Requires federal-provincial agreement
Timing unclear for some B.C. and Quebec carriers
Trigger, retention and cost-sharing formula
Not published
No basis yet for predicting market effects
Five-year review of market impact
Stated
Ottawa itself treats pricing and availability effects as uncertain
The table is the honest summary. The architecture is visible. The mechanics are not.
The earthquake measure is one of several Budget 2026 items that touch homeowners.
Canada's insurers are well capitalized for ordinary catastrophes. The concern has always been the extraordinary one. In its statement on Budget 2026, the Insurance Bureau of Canada (IBC) said the industry had called for a government response to systemic earthquake risk for decades, and framed the Facility as a way to reduce the potential burden on taxpayers and the impact on insurance consumers.
The arithmetic behind that worry comes from the Property and Casualty Insurance Compensation Corporation (PACICC), the industry-funded body that protects policyholders when an insurer fails. As reported in July 2026, PACICC warned that losses above $45 billion from an earthquake in B.C. or Quebec would overwhelm the system without a federal backstop, up from a $35 billion threshold in its 2020 estimate. Its modelling also noted that both regions remain exposed to fire-following losses, which standard policies cover.
That is the mechanism to understand. When one insurer fails, PACICC assessments are levied on the surviving insurers. In a severe enough event, those assessments can push healthy companies over the edge too. A backstop is designed to interrupt that cascade before it starts.
Every other G7 country with material seismic exposure already has some version of this. The comparison was never about generosity. It was about whether the system has a pre-agreed plan for the worst day, or improvises one afterwards.
Regulators have been circling the same issue from another direction.
Canada's insurers are well capitalized for ordinary catastrophes. The concern has always been the extraordinary one. In its statement on Budget 2026, the Insurance Bureau of Canada (IBC) said the industry had called for a government response to systemic earthquake risk for decades, and framed the Facility as a way to reduce the potential burden on taxpayers and the impact on insurance consumers.
The arithmetic behind that worry comes from the Property and Casualty Insurance Compensation Corporation (PACICC), the industry-funded body that protects policyholders when an insurer fails. As reported in July 2026, PACICC warned that losses above $45 billion from an earthquake in B.C. or Quebec would overwhelm the system without a federal backstop, up from a $35 billion threshold in its 2020 estimate. Its modelling also noted that both regions remain exposed to fire-following losses, which standard policies cover.
That is the mechanism to understand. When one insurer fails, PACICC assessments are levied on the surviving insurers. In a severe enough event, those assessments can push healthy companies over the edge too. A backstop is designed to interrupt that cascade before it starts.
Every other G7 country with material seismic exposure already has some version of this. The comparison was never about generosity. It was about whether the system has a pre-agreed plan for the worst day, or improvises one afterwards.
Regulators have been circling the same issue from another direction.
What the Facility is designed to do, and what it isn't
A backstop for insurers, not a policy for you
The cleanest way to read the announcement is as a financial floor beneath the insurers themselves. IBC's own proposal, the Canadian Earthquake Risk Protection Act, was modelled on the U.S. Terrorism Risk Insurance Act: a rules-based formula that splits extreme losses between government and industry, agreed before disaster strikes. Budget 2025 committed only to consultation; Budget 2026 commits to legislation. Whether the final design mirrors the industry's proposal is one of the open questions.
Here is the framework, stated plainly.
What the Facility is designed to do:
Keep insurers solvent and paying claims after an earthquake large enough to exhaust their capital and reinsurance.
Reduce the risk that one insurer's failure triggers others through the PACICC assessment chain.
Give the market more certainty, which could, over time, support the availability of earthquake coverage.
What it does not do:
Add earthquake coverage to a policy that doesn't already include it.
Change your deductible, your limits or your exclusions.
Pay homeowners directly, or replace private insurance for anyone without the endorsement.
Guarantee lower premiums. The five-year review exists precisely because market effects are not known in advance.
That last point deserves weight. If you are uninsured for earthquake today, a functioning backstop means your neighbour's insurer is more likely to pay your neighbour's claim. It does nothing for your own uninsured loss.
Canadians have seen this gap between announcement and household protection before.
The cleanest way to read the announcement is as a financial floor beneath the insurers themselves. IBC's own proposal, the Canadian Earthquake Risk Protection Act, was modelled on the U.S. Terrorism Risk Insurance Act: a rules-based formula that splits extreme losses between government and industry, agreed before disaster strikes. Budget 2025 committed only to consultation; Budget 2026 commits to legislation. Whether the final design mirrors the industry's proposal is one of the open questions.
Here is the framework, stated plainly.
What the Facility is designed to do:
Keep insurers solvent and paying claims after an earthquake large enough to exhaust their capital and reinsurance.
Reduce the risk that one insurer's failure triggers others through the PACICC assessment chain.
Give the market more certainty, which could, over time, support the availability of earthquake coverage.
What it does not do:
Add earthquake coverage to a policy that doesn't already include it.
Change your deductible, your limits or your exclusions.
Pay homeowners directly, or replace private insurance for anyone without the endorsement.
Guarantee lower premiums. The five-year review exists precisely because market effects are not known in advance.
That last point deserves weight. If you are uninsured for earthquake today, a functioning backstop means your neighbour's insurer is more likely to pay your neighbour's claim. It does nothing for your own uninsured loss.
Canadians have seen this gap between announcement and household protection before.
Shaking is usually excluded; fire afterwards usually isn't
Most Canadian home policies exclude damage caused directly by earthquake shaking. Coverage is typically bought as an optional endorsement — insurers also call it a rider or extension — added to a house, condo or tenant policy.
Quebec's financial regulator is blunt about the misconception. The Autorité des marchés financiers, citing IBC research, says 38% of Quebecers wrongly believe their basic home policy protects them against earthquakes, while only about 7% have appropriate coverage. The same guidance notes that damage from fire, explosion or smoke following an earthquake is generally covered by home insurance contracts.
That distinction is the single most important thing to understand about your existing policy. A quake that cracks your foundation is usually an endorsement claim. A quake that ruptures a gas line and burns the house down is usually a standard-policy claim. Several national insurers describe it this way; TD Insurance, for instance, says its home coverage pays for fire, explosion and smoke following an earthquake, and makes earthquake coverage mandatory in certain high-risk areas of B.C.
Even with the endorsement, common exclusions remain. Tsunami and tidal-wave damage, surface water and landslides unrelated to the quake are frequently carved out, and loss of land value is generally not insured at all. Policy wording varies by insurer, so the only reliable answer is in your own documents.
Shaking is usually excluded; fire afterwards usually isn't
Most Canadian home policies exclude damage caused directly by earthquake shaking. Coverage is typically bought as an optional endorsement — insurers also call it a rider or extension — added to a house, condo or tenant policy.
Quebec's financial regulator is blunt about the misconception. The Autorité des marchés financiers, citing IBC research, says 38% of Quebecers wrongly believe their basic home policy protects them against earthquakes, while only about 7% have appropriate coverage. The same guidance notes that damage from fire, explosion or smoke following an earthquake is generally covered by home insurance contracts.
That distinction is the single most important thing to understand about your existing policy. A quake that cracks your foundation is usually an endorsement claim. A quake that ruptures a gas line and burns the house down is usually a standard-policy claim. Several national insurers describe it this way; TD Insurance, for instance, says its home coverage pays for fire, explosion and smoke following an earthquake, and makes earthquake coverage mandatory in certain high-risk areas of B.C.
Even with the endorsement, common exclusions remain. Tsunami and tidal-wave damage, surface water and landslides unrelated to the quake are frequently carved out, and loss of land value is generally not insured at all. Policy wording varies by insurer, so the only reliable answer is in your own documents.
Earthquake deductibles: the percentage isn't the number that matters
How percentage deductibles work
Earthquake deductibles are not the flat $1,000 or $2,500 most owners are used to. The Financial Consumer Agency of Canada says the deductible is usually a percentage of the coverage limit for the earthquake add-on, typically ranging from 5% to 20%, and that you receive money only if the damage exceeds that amount. Some insurers let you lower the percentage in exchange for a higher premium.
Regional practice clusters within that range. In Quebec, CAA-Québec describes deductibles of 5% to 15% of the value of the coverage, giving the example of a $40,000 deductible on a $400,000 home.
National carriers such as Intact describe the same 5% to 20% band, applied to the home insurance coverage limit.
The table below converts those percentages into dollars. It is illustrative arithmetic only; your insurer's wording determines which limit the percentage is applied to and how it treats contents and living expenses.
3 rows · 5 columns
Insured dwelling limit
5% deductible
10% deductible
15% deductible
20% deductible
$500,000
$25,000
$50,000
$75,000
$100,000
$800,000
$40,000
$80,000
$120,000
$160,000
$1,200,000
$60,000
$120,000
$180,000
$240,000
Read the rows, not the columns. A 10% deductible on a $1.2 million rebuild cost is $120,000 out of pocket before the policy pays anything. Moderate damage — cracked plaster, a shifted chimney, broken windows — can easily fall entirely below that line.
PACICC's modelling makes the same point at the system level: in B.C., higher earthquake deductibles mean many personal property losses would never reach the claims stage. That cuts both ways. It limits the industry's exposure, and it leaves those losses with households.
How percentage deductibles work
Earthquake deductibles are not the flat $1,000 or $2,500 most owners are used to. The Financial Consumer Agency of Canada says the deductible is usually a percentage of the coverage limit for the earthquake add-on, typically ranging from 5% to 20%, and that you receive money only if the damage exceeds that amount. Some insurers let you lower the percentage in exchange for a higher premium.
Regional practice clusters within that range. In Quebec, CAA-Québec describes deductibles of 5% to 15% of the value of the coverage, giving the example of a $40,000 deductible on a $400,000 home.
National carriers such as Intact describe the same 5% to 20% band, applied to the home insurance coverage limit.
The table below converts those percentages into dollars. It is illustrative arithmetic only; your insurer's wording determines which limit the percentage is applied to and how it treats contents and living expenses.
3 rows · 5 columns
Insured dwelling limit
5% deductible
10% deductible
15% deductible
20% deductible
$500,000
$25,000
$50,000
$75,000
$100,000
$800,000
$40,000
$80,000
$120,000
$160,000
$1,200,000
$60,000
$120,000
$180,000
$240,000
Read the rows, not the columns. A 10% deductible on a $1.2 million rebuild cost is $120,000 out of pocket before the policy pays anything. Moderate damage — cracked plaster, a shifted chimney, broken windows — can easily fall entirely below that line.
PACICC's modelling makes the same point at the system level: in B.C., higher earthquake deductibles mean many personal property losses would never reach the claims stage. That cuts both ways. It limits the industry's exposure, and it leaves those losses with households.
Important
A percentage deductible rises as your coverage limit rises. If you have increased your dwelling limit to keep pace with rebuilding costs, your earthquake deductible in dollars has likely increased too, even if the percentage on your declarations page hasn't changed.
High uptake with high deductibles versus very low uptake
The two regions named in the budget have very different problems. IBC estimates take-up of earthquake coverage for personal property at roughly 50% to 65% in British Columbia and just 4% to 7% in Quebec, and suggests much of the gap reflects a mistaken belief that standard policies already include it.
In B.C., the gap is less about who has coverage and more about what that coverage pays. A majority of owners carry the endorsement, but percentage deductibles mean a moderate quake could leave many claims below the threshold. Strata owners have an extra layer: a B.C. broker, InsureBC, notes that a strata corporation's earthquake deductible is shared among units by entitlement, and that some insurers offer deductible buy-back coverage to unit owners to cover their share.
In Quebec, the gap is coverage itself. With single-digit uptake, most owners in the Montreal–Quebec City corridor would rely on their standard policy, which generally responds to fire following a quake but not to shaking damage.
The broker community in the higher-risk West sees the Facility as reassuring. Speaking to Insurance Business Canada, Insurance Brokers Association of Canada president Jessica Asano, a broker on Vancouver Island, said the Facility would give people real peace of mind. That peace of mind is real at the system level. It still has to be matched by coverage at the household level.
High uptake with high deductibles versus very low uptake
The two regions named in the budget have very different problems. IBC estimates take-up of earthquake coverage for personal property at roughly 50% to 65% in British Columbia and just 4% to 7% in Quebec, and suggests much of the gap reflects a mistaken belief that standard policies already include it.
In B.C., the gap is less about who has coverage and more about what that coverage pays. A majority of owners carry the endorsement, but percentage deductibles mean a moderate quake could leave many claims below the threshold. Strata owners have an extra layer: a B.C. broker, InsureBC, notes that a strata corporation's earthquake deductible is shared among units by entitlement, and that some insurers offer deductible buy-back coverage to unit owners to cover their share.
In Quebec, the gap is coverage itself. With single-digit uptake, most owners in the Montreal–Quebec City corridor would rely on their standard policy, which generally responds to fire following a quake but not to shaking damage.
The broker community in the higher-risk West sees the Facility as reassuring. Speaking to Insurance Business Canada, Insurance Brokers Association of Canada president Jessica Asano, a broker on Vancouver Island, said the Facility would give people real peace of mind. That peace of mind is real at the system level. It still has to be matched by coverage at the household level.
What to review at your next renewal
Questions to ask, not changes you're required to make
Nothing in Budget 2026 requires you to change your policy, and nothing in it changes your policy for you. The announcement is simply a good prompt to know what you actually hold. Bring these questions to your broker or insurer at renewal:
Do I have the earthquake endorsement? Check the declarations page, not your memory. If it isn't listed, assume you don't have it.
What is my deductible in dollars? Ask which limit the percentage applies to — dwelling only, or dwelling plus contents — and whether it is calculated on replacement cost or actual cash value.
Does the earthquake deductible apply to additional living expenses? Some insurers treat temporary housing differently from structural damage, and some exclude living expenses after an earthquake evacuation.
What does my standard policy pay for fire, explosion and smoke after a quake? Confirm this in writing; it is the coverage most Quebec owners would actually rely on.
What are the endorsement's exclusions? Look specifically for tsunami, landslide, surface water and land-movement wording.
If I own a strata or condo unit, what is the corporation's earthquake deductible and my share of it? Ask whether your unit policy includes deductible assessment coverage and at what limit.
Is my insurer federally or provincially regulated? This won't change your policy, but it may affect how quickly the Facility applies to your carrier once it exists.
Note
Treat any offer framed around the new federal backstop with care. As of Nov. 6, 2026, the Facility has not been legislated, its terms are not public, and no policy is "backed by" it yet.
The broader question of who in Canada lacks disaster coverage, and what a federal fix could look like, runs well beyond earthquakes.
Ryan is the founder of Homeowner.ca and a proud Canadian homeowner based in Guelph, Ontario. Over his 25-year career in digital publishing, he has focused on transforming complex information into clear, practical guidance that helps people make confident, well-informed decisions.
Government of Canada. (2026). Budget 2026, Chapter 5: A safe and sovereign Canada. Retrieved from https://budget.canada.ca/
Insurance Bureau of Canada. (2026, November 5). Insurance Bureau of Canada Statement on Canada's 2026 Federal Budget. Retrieved from https://www.newswire.ca/
Insurance Bureau of Canada. (n.d.). Canada must prepare for a catastrophic earthquake. Retrieved from https://www.ibc.ca/
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Insurance Bureau of Canada. (2025, November 12). Preparing for the inevitable: Why Canada must address its earthquake risk now. Retrieved from https://www.ibc.ca/
Financial Consumer Agency of Canada. (2026). Home insurance for unexpected events and disasters. Retrieved from https://www.canada.ca/
Autorité des marchés financiers. (n.d.). Catastrophes naturelles : êtes-vous couvert?. Retrieved from https://lautorite.qc.ca/
Thompson's World Insurance News. (2026, July 6). PACICC updates industry 'tipping point' estimate. Retrieved from http://thompsonsnews.com/
Insurance Business Canada. (2026, November 6). Canada creates earthquake insurance backstop as Carney budget addresses decade-long gap. Retrieved from https://www.insurancebusinessmag.com/
CAA-Québec. (2026). How does earthquake insurance work in Quebec?. Retrieved from https://www.caaquebec.com/
Intact Insurance. (n.d.). Earthquake insurance coverage. Retrieved from https://www.intact.ca/
