Commercial property insurance gives you monetary coverage for the damage or physical loss of your business premises and their contents. All businesses, no matter their size, are subject to unforeseen disasters, so it’s always advised to find the right insurance.
Below, we walk you through everything you need to know (and more) about commercial property insurance.
What Is Commercial Property Insurance?
Commercial property insurance is also referred to as commercial rental insurance, business property insurance, and commercial building insurance. It offers financial coverage for the damage or physical loss of your property and its contents due to an external influence like theft, vandalism, and fires.
Usually, these events result in two types of loss:
- The direct loss of materials, documents, products, or equipment.
- Indirect financial loss due to business interruption like inaccessible offices or storefronts.
It doesn’t matter whether you’re a small bistro owner or a multimillion-dollar enterprise; you’ll benefit from commercial property insurance in Canada.
The Typical Deductibles
Most policies keep your premium cost down by including one (occasionally, more than one) deductible. They can vary, but the most common ones seen in commercial property insurance are as follows:
- Waiting Periods — Waiting periods are the timeframe set before the cover applies. It could be 10 hours from the start of the business interruption.
- Flat Deductibles — It’s a predetermined monetary amount given to every loss. Flat deductibles are the most popular type of deductible found in commercial property insurance plans.
- Percentage Deductibles — This type is usually used in disastrous events to cover a portion of the property’s value or the policy limit.
What Does Commercial Property Insurance Cover?
There are limits to commercial property insurance coverage, and it varies from policy to policy. But, the majority of policies tend to cover the following:
- Inventory — Your commercial property insurance policy can cover your physical products or raw materials stored inside the building. It gives you the funds to replace or fix your inventory after a fire, theft, or other damage.
- Immovable Tenant Improvements — If you improve a building as a leaseholder, this part of the policy covers the costs should damage occur. It protects immovable items like lighting, paint, and carpeting.
- Electronics — It gives you the money to repair or replace any electronics that were stolen or damaged inside and outside
- Building Coverage — Whether you own or lease the building or space where your business operates, commercial property insurance covers it. The types of properties insured could be offices, warehouses, workplaces, and storage spaces. If you have multiple business buildings, it’s wise to take out separate policies for each one.
- Employee Possessions — If your employees’ personal items or stolen or damage while they’re on your business premises, commercial property insurance gives you the funds to replace or repair them.
- Business Interruption — In situations where the property theft or damage is catastrophic and shuts down operations, the policy covers any income you lost during that period. If your business must cease operations due to snowstorms, fallen trees, or other external factors, commercial property insurance covers the resulting income losses too.
- Equipment, Furnishings and Fixtures — If your equipment, fixtures, or furnishes are stolen, lost or damaged due to unprecedented events, the insurance pays out.
What Doesn’t Commercial Property Insurance Cover?
All insurers compile strict guidelines and limitations regarding the events and items covered under their policies. But, they all differ, with some being more generous than others.
The two primary reasons why some incidents aren’t included in the commercial property insurance bracket are as follows:
- The coverage you need exists in an entirely different type of insurance policy.
- The cause of damage or loss is excluded from the policy.
The latter reason is where insurers vary wildly. Although, some of the causes are negotiable, depending on the insurer you provide. Some common policy exclusions include:
- Pollution or smog
- Water damage due to sewer backups, seepage, or flooding
- Property loss or damage due to standard wear and tear, decay, corrosion, and dust
- Power failures
- The explosion of machinery
- Acts of terrorism
- Government operations like nuclear hazards and military acts
- Property damage or loss due to faulty planning, development, or design
- Cash, precious metals, or securities (You can get crime insurance to cover these if necessary)
- Disappearances of an item if you can’t explain the loss
- Machinery or equipment damage due to wear and tear caused by standard use
- Thefts, damages, or losses within or around a property left empty or unoccupied for more than 30 days
If you need cover from any popular exclusions above, you can ask your insurer to quote for the added protection. Or better yet, let us at LiabilityCover connect you with industry-experienced brokers and agents who can give you precisely what you need right off the bat.
Who Needs Commercial Property Insurance?
Commercial property insurance is a good idea if you:
- lease or own a business building, equipment, inventory, or space.
- use machinery, computers, or hardware for your business.
- have a commercial or office space.
- conduct business off-site.
- use portable tech like tablets, laptops, and phones for work reasons.
The Top 5 Benefits of Commercial Property Insurance
By now, you’ve probably already realized the benefits of having this type of insurance. But if not, you can find the top five below:
#1 It Helps Deal with Unexpected Losses
You can plan for unforeseen scenarios to your heart’s content, but sometimes, a disaster that you never thought about or didn’t expect quite so soon happens.
Natural disasters like winter storm damage, fire, hail, and some water-caused problems are out of your control. Not to mention they can cause catastrophic property damage.
Although not all natural disasters are covered, commercial property insurance can fund the repair costs, so you don’t have to worry about keeping your business afloat.
#2 It Handles Replacement Costs
If the damage is beyond repair, commercial property insurance can fund the cost of replacing the items.
Let’s look at an example:
You have an office building with furniture and computer equipment inside. One day, a fire occurs, causing damage to your laptops, desktops, desks, and chairs.
Replacing all the equipment from your own pocket is impossible as you lost $50,000 worth of tech. But with commercial property insurance, you make a claim and receive enough to replace all the items you lost in the fire.
#3 It Covers Repair Costs
If you suffer property damage that can be repaired, your insurance policy funds it (as long as the cause type is covered by your insurer).
We’ll have a look at another example:
You own a small brick-and-mortar shop in the city. One night, somebody vandalized your door, and the damage is preventing your customers from entering your store.
With the right commercial property insurance policy, you can get the repairs done as soon as possible without costing your business too much.
#4 It Funds Any Lost Income
If we continue with the example above, you’ve lost income since customers couldn’t come into your store due to vandalism, nor could they enter during repairs. So, commercial property insurance reimburses you to mitigate this loss to help you keep up with payroll and bills.
#5 It Manages the Recovery Process
Losses are incredibly difficult for any business, and the longer it takes to recover from them, the harder the experience becomes.
If the damage was caused by an insured peril, your policy allows you to get back on your feet quickly by minimizing any long-term effects.
How Much Does Commercial Property Insurance Cost?
The average business in Canada pays roughly $83 to $250 per month for a commercial property insurance coverage limit of $1 million. Depending on your professional needs, that limit can be reduced or raised, which in turn, decreases or increases the monthly premium.
While the price varies from insurer to insurer, there are other particular factors that also influence the price, including:
The Location of Your Property
Is your business situated in an area vulnerable to fault lines? Is your commercial property lacking fire protection measures due to its location? If so, your commercial property insurance will cost less than companies in the city where there are fewer chances of earthquakes and higher fire fighting facilities.
Your Business Type
In other words, how is your commercial property used? Your answer plays a massive role in the total cost of your insurance policy. The less hazardous the tasks, the less expensive the insurance.
Offices are typically cheaper to insure than manufacturing facilities and restaurants. Plus, if your business is housed under the same roof as a potentially dangerous one, your insurance may rise because of that.
The Current Condition and Construction of Your Property
What is your building made from? When was your building built? What is the fire rating of your building? All of these questions determine the price.
If you haven’t yet found an office space or business venue, it’s worth keeping these queries in mind when you attend viewings. Getting the best deal isn’t just about the lease price; it’s also about ensuring you can comfortably afford the insurance to protect yourself should unexpected events occur.
Your Insurance Claims History
Businesses with a long list of insurance claims are seen as riskier than those who have never made a claim. If you fall under the former category, you should expect higher premiums.
Why Choose LiabilityCover?
#1 We Help You Get Cover Quickly
No more trawling through broker after online broker! With just a simple form sent to our team, we connect you to an insurer with industry-specific experience.
#2 We Make It Easy to Compare Rates
You never have to worry about whether you got the best price. With our agents, we make sure you do.
#3 We Have Access to Loads of Licensed Insurers
We have relationships with tons of licensed brokers and agents in the area, ensuring you always get the perfect policy.
Frequently Asked Questions
Is Commercial Property Insurance Enough?
That depends on you and your business. But, generally speaking, you shouldn’t rely solely on commercial property insurance since your company is likely vulnerable to other dangers that aren’t covered under the policy.
As far as the bare minimum for insurance as a business owner goes, it’s worth having a look at the “business owner’s policy package.”
What Is a Business Owner’s Policy?
Essentially, it’s a bundle of insurance that usually includes general liability insurance, crime insurance, and commercial property insurance.
However, you shouldn’t necessarily choose this option as it’s important to address your needs, which are likely different from other businesses’. At LiabilityCover, we connect you with insurers who have industry experience and specialisms to ensure you get the right cover for your company.
Is Commercial Property Insurance a Legal Requirement in Canada?
No, it isn’t a legal requirement in Canada. With that said, many business owners deem it necessary for that extra layer of security and peace.
Does Commercial Property Insurance Employee Theft?
No, you must take out crime insurance to cover employee theft. Even though commercial property insurance covers you from third-party property damage, it won’t protect securities or money.
It’s estimated that one in three businesses in Canada is worried about employee theft. Crime insurance covers theft of money and securities, computer fraud, and forgery (among other events).
Do Online-Based Businesses Need Commercial Property Insurance?
Even though you may not sell your products from a brick-and-mortar shopfront, you might want to ensure your office space and the digital equipment you own. Depending on the type of online company, you should also consider insuring your storage space.
Do Commercial Property Insurance Policies Cover Empty Buildings?
After 30 days, non-residential properties are deemed vacant, which makes them a higher risk in the eyes of your insurer. It’s more susceptible to vandalism and theft, thus potentially changing the way your insurer deals with your claim.
Because of that, many insurers decide to extricate some coverages from your policy following 30 days of property vacancy. However, you should check with your broker or agent for specifics.