Time line of Earthquakes in Chile. Earthquakes in Chile. Chile is located on a tectonic plate boundary and a subduction zone called the Peru-Chile trench. A subduction zone is where the ocean crust slides under the continental margin which causes compressional deformation (mountain building), earthquakes and volcanoes.arthquakes occur at any fault line, but the most destructive earthquakes happen at subduction zones. In fact, the largest earthquake of this century was in Valdivia Chile, on May 21st 1960. Siesmicity has shown us that Chile has continual earthquakes year in and year out, some much bigger than others.