Get the Best Commercial Property Insurance for April 2024

Are you a business owner in Canada who runs their business out of a physical location? Do you ever wonder what would happen to your building if there were a flood, water damage or hail damage? These are just a few of many perils that could cause damage to your building, causing expensive damage and derailing your ability to operate normally.

A commercial property insurance policy is something you should seriously consider to protect your property and your business's financial well-being.

We have put together a guide for business owners on what commercial property insurance is, what it covers and how it can protect the livelihood of your business in the event of a loss due to circumstances outside of your control.

What is commercial property insurance?

The simple answer: Commercial property insurance is used to cover any commercial property. It is typically a part of comprehensive business insurance.

Commercial property insurance protects commercial property from fires, theft and natural disasters. It is highly recommended that businesses, including manufacturers, retailers, service-oriented businesses and not-for-profit organizations carry commercial property insurance. You can generally bundle it together with other forms of insurance, such as commercial general liability insurance and/or professional liability insurance.

Commercial property insurance is a must-have for any business that has an office, workspace, storage space or brick-and-mortar store that they rely on. Such business premises are valuable assets because of the following uses:

• Storing valuable equipment and documents needed for day-to-day operations
• Storing physical products that the business sells or materials that the business uses
• Receiving customers or meeting with clients

Considering all the above functions, an incident concerning commercial property can lead to:

• Direct financial loss in the event of damage to equipment, documents, products or materials.
• Business interruption in the case that the store, office or workplace becomes inaccessible to employees and customers.

According to the Insurance Bureau of Canada, the average annual cost of claims for property damage or losses in Canada due to severe weather over the last decade is around $2 billion. That number has actually quadrupled over the previous decade! This makes it nearly a necessity to have commercial property insurance.

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What does commercial property insurance cover?

Imagine it is an abnormally cold winter in Canada and an ice storm hits causing significant damage to the building's windows, signage and roof resulting in thousands of dollars to repair each to its original condition.

This is where commercial property insurance comes into play.

Commercial property insurance is designed to protect the physical assets of a business against loss or damage from a broad range of causes. A fire, hurricane, ice storm, earthquake and water damage are just some of the natural disasters that business owners need to contemplate. Vandalism or damage due to riots is another possible threat to business operations.

Commercial property insurance will cover a broad variety of business property, including:

In Canada, a typical policy limit would cover up to $1 million in covered damages.

What does commercial property insurance not cover?

While commercial property insurance covers many very costly losses, there are a few key items that it would not cover.

Commercial Property Insurance does not typically provide coverage for:

• The mysterious disappearance of an item, where the cause of loss cannot be explained;
• Property left at vacant or unoccupied locations for over 30 days.
• Wear and tear to equipment due to regular use.
• Cash, securities, or precious metals.

How much does commercial property insurance cost?

An average business in Canada pays $83 to $250 per month for a commercial property coverage limit of $1 million.

As with any insurance, the cost and amount of commercial property insurance you need will vary by business. The following factors are taken into consideration when determining the best policy options for you:

• Type of Property
• Type of Business
• Age and Condition of Property
• Property Location
• Previous Insurance Claims

It is challenging to say exactly what your premiums would be without first exploring your insurance options and business requirements. Commercial property insurance rates can vary. No two properties are the same. The business type, size, location, equipment and more are all part of calculating premiums.

Plan limits and inherent threats based on your industry are also factors. Talk to your broker or insurance agent to get a more accurate idea of what your premium could be.

Is commercial property insurance mandatory in Canada?

In Canada, with the exception of insuring a company car, commercial property insurance is usually not mandatory for you to run your business. However, it can protect you from many of the costs associated with unforeseen and natural disasters resulting in losses. When deciding whether or not to purchase commercial property insurance, consider the value of your building and the assets located within the building (computers, furniture, etc) and if you can afford to fix and replace those items out of your own pocket.

Note that if you are financing the property or equipment your lender may insist on you having business insurance.

How much commercial property insurance do I need?

How much commercial property insurance you need will depend on factors surrounding your business and its operations.

If you run a manufacturing business it is likely you are running operations out of a large commercial building with many computers and heavy costly equipment, which puts you at a higher risk of a costly claim in the event of a covered loss which means you will likely increase the amount of coverage you need which will increase your premium.

On the other hand, if you run a tax accounting company out of a small building, it is reasonable that the insurer would see your property as less risky and therefore you would not need as high of coverage limits which would decrease the amount of premium you pay each month.

Talk to your broker or insurance agent to find out exactly how much commercial property insurance is appropriate for your business.

Can I bundle commercial property insurance with other business insurance?

Bundling insurance is a common practice and can help you get comprehensive coverage at the best possible price. We recommend talking to your insurance broker or advisor.

A general business insurance plan protects you from injuries that may occur on your premises. For example, a client trips and falls sustaining a back injury while meeting with you to discuss their taxes. A professional liability insurance policy would cover lawsuits alleging negligence if you make an error resulting in your client owning a substantial amount of taxes. A commercial property insurance policy would protect your building from damage caused by fire, hail damage, and flooding, just to name a few. It would also pay to replace desks, computers and other items damaged by the covered loss.

You may also want to bundle a cyber insurance policy in addition to your other policies that will protect you in the event your data and your client's data from your computers get hacked.

Some companies allow you to bundle small business insurance and save you money while providing coverage for a wide variety of situations. Talking to your broker or insurance company can potentially save you money and hassle by having multiple policies under one umbrella.

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Alexandre Desoutter

Alexandre Desoutter has been working as editor-in-chief and head of press relations at HelloSafe since June 2020. A graduate of Sciences Po Grenoble, he worked as a journalist for several years in French media, and continues to collaborate as a as a contributor to several publications.