What Budget 2026 announced
On November 5, 2026, the federal government released Budget 2026, titled "Masters of Our Destiny." One of the most consequential commitments for the insurance industry was the creation of the Canadian Earthquake Insurance Facility, a government-backed financial backstop for the property and casualty insurance sector following a catastrophic earthquake.
The facility would provide emergency funding of up to $50 billion to insurers after an extreme earthquake. Legislation to establish it will be introduced in Parliament, and both the Insurance Bureau of Canada and the Insurance Brokers Association of Canada are set to take part in the design and implementation discussions as the process advances.
The industry has pressed Ottawa for one since at least 2016, and the 2025 budget committed to consultations. The 2026 budget moves the file from consultation to legislation.
Why the industry wanted a backstop
The numbers behind the announcement explain why the industry treated it as a milestone. The Insurance Bureau of Canada estimates that a severe earthquake could generate insured losses of approximately $52.6 billion. That figure sits well above the roughly $35 billion threshold at which the Bureau says a single catastrophic event could overwhelm the property and casualty market and contribute to insurer failures.
Canada's property and casualty industry holds approximately $50 billion in capital to cover all claim types across the country, auto, home, and business combined, so a major seismic event could exhaust that entire capital base on its own.
Coverage uptake adds to the problem. Around 50 to 65 percent of homeowners in British Columbia carry earthquake coverage, but only about 4 to 7 percent do in Quebec. Federal scientists typically place the probability of a magnitude 8 or greater earthquake on the Cascadia fault off British Columbia within the next 50 years at around 30 percent. The facility is designed so that, if that kind of event happens, insurers can keep paying claims instead of failing under the weight of them.
What the facility does, and does not do, for your home
This is the part that matters most for homeowners, and it is easy to misunderstand. The facility is a backstop for insurers, not a payout to homeowners. It does not add earthquake coverage to your home policy, it does not pay your deductible, and it does not change a single word of the policy you hold today.
What it does is protect the system that pays claims. If a catastrophic earthquake produces losses beyond what the industry can absorb, the facility provides emergency funding to the sector so insurers can meet their obligations to policyholders. For a homeowner with earthquake coverage, that is the difference between an insurer that can pay a large claim and one that cannot. For a homeowner without earthquake coverage, the facility changes nothing about what their own policy will cover.
The budget also amends the mandate of the Office of the Superintendent of Financial Institutions to embed competition as a formal consideration alongside financial stability, a separate change aimed at the regulatory environment rather than individual policies.
Where Ontario fits in the earthquake picture
Ontario sits well below British Columbia and Quebec on the seismic risk scale, but the province is not free of earthquake risk. Eastern Ontario, including the Ottawa Valley and the St. Lawrence Valley, has the most recorded seismic activity in the province, and small earthquakes are recorded in Ontario most years. The risk of a catastrophic event here is much lower than on the West Coast, which is why the national conversation is centred on British Columbia and Quebec.
Lower risk does not mean no risk. The announcement is a good prompt to check what your own policy says, because earthquake damage is one of the gaps that catches people by surprise at claim time.
What to check on your own policy
A standard Ontario home insurance policy typically excludes damage caused by earth movement, including earthquakes. If you want that risk covered, it is usually available as an endorsement added to the policy, for an additional premium. If you have never asked about it, there is a good chance it is not on your policy.
If you do have an earthquake endorsement, look at the deductible. Earthquake deductibles are often set as a percentage of the insured value of the home rather than as a flat dollar amount, which can make the deductible much larger than your regular home insurance deductible. A homeowner who has not read that number closely can be surprised by how much of a claim they would pay themselves before the insurer pays anything.
Two other details are worth checking: whether the endorsement covers both the structure and the contents, and whether it covers the cost of bringing a damaged home up to current building code during repairs, since older homes can face significant extra costs after a major event. If any of these answers are unclear, ask your broker before renewal, not after a claim.
The bottom line
Budget 2026's earthquake facility is a significant step for Canada's insurance system, and it closes a gap that set Canada apart from every other G7 country with meaningful seismic risk. But it is a backstop for insurers, and it will not decide whether your home is covered when the ground moves. That decision is already sitting in your policy wording, in the endorsements you hold, and in the deductible you agreed to.
Ontario homeowners do not face the same risk as homeowners in British Columbia, but the coverage question is the same everywhere. A few minutes with your policy, or a quick call to your broker, can tell you whether earthquake damage is covered, what the deductible would be, and what it would cost to add the coverage if it is missing. That is a conversation worth having while the news is fresh, not after the ground shakes.