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Business Property Insurance

Whether you own a retail store, an office building, or an industrial warehouse, our expert business insurance brokers are committed to providing you with the best insurance solutions. We protect your property against a range of risks, including natural disasters, theft, and accidental damage, ensuring peace of mind for you and your business.

If you're contemplating, "how can I find the right insurance policy for my business?" Stick around to learn more.

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What is a commercial property insurance policy?

Commercial property insurance protects businesses against potential losses and damages to both your commercial space and physical assets. This includes buildings, equipment, inventory, furniture, and other property associated with the business. Moreover, commercial property insurance, also known as business property insurance, is not just about protecting a business’s physical assets; it’s also about ensuring business continuity in the face of disruptions.

Its comprehensive nature and adaptability make it essential to any business’s risk management strategy and commercial insurance portfolio, offering a safety net that helps companies navigate through unforeseen challenges.

What do commercial property insurance policies cover?

Commercial property insurance is a critical form of protection for businesses in Canada, offering a safety net against various risks that can impact physical assets and operational stability. Here are the primary key aspects of commercial building insurance in more detail:

Coverage for physical assets

This type of insurance protects a range of physical assets crucial to business operations, including the building itself, whether owned or leased, as well as fixtures, furniture, and equipment. It also extends to cover external aspects like signage. The policy is specifically designed to protect against various risks, including fire and smoke damage, theft and vandalism, and weather-related damages like storms and hail.

The coverage can be highly customized to meet the specific needs of different businesses. For example, a manufacturing unit with expensive machinery will have different insurance requirements than a small retail store. When setting up an insurance policy, the valuation of covered assets can be based either on their actual cash value or their replacement cost.

Protection against interruptions with business interruption coverage

This coverage is essential for compensating a business for lost income and expenses during periods when they are unable to operate due to covered property damage. If a business is forced to temporarily cease operations due to a covered event like a fire, this insurance helps replace lost income, enabling the business to continue meeting its financial obligations, such as rent and payroll.

Additionally, it covers operating expenses that continue despite the interruption, like utility bills or lease payments. It can also cover extra expenses to keep the business operational, such as renting a temporary space or relocating to a different building.

What is the difference between actual cash value and replacement cost?

Actual cash value (ACV) and replacement cost represent two different methods of valuing property in insurance policies, each with distinct implications for policyholders. Below, we explain these in detail:

Actual cash value

Actual cash value (ACV) is the method of valuing an insured property by considering its current used value and factoring in depreciation. This means that ACV believes an item's value decreases over time due to factors like wear and tear, age, or obsolescence. In the event of a loss, an ACV-based policy will pay out the item's depreciated value, not the cost of buying it new.

Consequently, while insurance premiums for ACV coverage tend to be lower, the payout in the event of a claim may not be sufficient to replace the lost or damaged item fully. This type of valuation is often used in policies for older properties or items where the cost of full replacement might not be economically justifiable due to the item’s depreciated value.

Replacement cost

On the other hand, Replacement cost refers to the amount it would cost to replace a damaged or destroyed item with a new one of similar kind and quality, without deduction for depreciation. This method bases the valuation on current market prices for similar items.

Policies offering replacement cost coverage usually have higher premiums than ACV policies, but they provide a more comprehensive form of protection. If a claim is made under a replacement cost policy, the policyholder is more likely to receive a payout that covers the entire cost of purchasing new items to replace the damaged or lost ones.

Which one is best?

The choice between the two in a policy depends on various factors, including the policyholder’s financial situation, the value of the insured items, and their willingness to bear risk. While ACV policies might be more budget-friendly with their lower premiums, they could lead to significant out-of-pocket expenses in the event of a major loss. Replacement cost coverage, although more expensive in terms of premiums, ensures a more complete financial recovery, enabling the policyholder to replace their assets without additional financial burden.

Benefits of commercial property insurance

From aiding in rapid recovery and covering repair or replacement costs to ensuring business continuity through interruption coverage, this insurance is a key component of risk management for any business.

Commercial property insurance is designed to provide comprehensive protection tailored to the unique needs of your business. It’s essential to ensure you’re equipped with the appropriate coverage for your business, such as:

Recovery from a loss

This aspect of commercial property insurance is crucial for mitigating the long-term effects of property damage caused by an insured peril, such as fires, storms, or vandalism. Recovering quickly from such incidents is vital for maintaining business continuity. This coverage ensures that your business can get back on its feet promptly, minimizing the period of disruption and helping to sustain your business operations and reputation.

Repair costs

Commercial property insurance plays a significant role in your business’s recovery by covering the repair costs in the event of a covered loss. This is essential for restoring your business premises and assets to their pre-loss condition. Whether it’s repairing structural damage to a building or fixing damaged equipment, this insurance can provide the financial resources needed to make these repairs without a substantial impact on your business finances.

Replacement costs

Sometimes, the damage to property or equipment may be too extensive to repair. In such cases, commercial property insurance can cover the replacement costs, allowing you to purchase new items or properties of similar quality and functionality. This coverage is particularly important to ensure that the loss of critical assets does not hinder your business operations.

Unexpected losses

Natural disasters and other unexpected events can cause significant damage and are often beyond our control. Commercial property insurance typically includes coverage for various events, including fire, winter storm, hail, and some forms of water damage. This coverage is essential as it provides a safety net in the face of unforeseen situations that could otherwise have devastating financial implications for your business.

Business interruption

Business interruption coverage is one of the most valuable aspects of commercial property insurance. This protection helps mitigate your loss of income when your business cannot operate normally due to covered property damage. It enables you to pay ongoing expenses such as bills, payroll, and other operational costs, ensuring the financial stability of your business during interruptions.

Commercial property insurance offers a range of essential benefits for your business’s protection and resilience. These benefits provide peace of mind and financial security, ensuring that unexpected events don’t derail your business operations or financial stability.

What does commercial property insurance not cover?

Commercial property insurance provides essential protection for businesses, but it’s important to note that there are certain exclusions and limitations, like various liability claims or data breaches, so you'll need to buy separate cyber insurance for businesses. Common exclusions include:

Third-party liability claims

Commercial property insurance primarily covers damage to the business’s physical assets. It typically does not include third-party liability claims. This means that if your business is sued for damages or injuries caused to others, these claims would not be covered under a standard commercial property insurance policy.

For instance, if a customer slips and falls in your restaurant and decides to sue for injuries, commercial property insurance would not cover this liability. Instead, businesses must have separate liability insurance, such as general or public liability insurance, to protect against such claims.

Professional liability claims

Mistakes or negligence in providing professional services that result in financial losses for clients are notable exclusions in commercial property insurance policies. For example, consider a construction firm that unintentionally builds a house that doesn’t comply with local building codes. This error leads to extra construction costs and financial losses for the client. Commercial property insurance wouldn’t cover the client’s financial losses since they resulted from professional negligence during the development period. This type of risk would instead be addressed by professional liability insurance or errors and omissions (E&O) insurance.

Vehicles and transportation equipment

Commercial property insurance, while comprehensive in many aspects, does not extend its coverage to vehicles and transportation equipment businesses use. This exclusion is significant because vehicles, whether they are used for delivery, transportation of goods, or other business purposes, represent a key asset and operational element for many companies. To ensure these vehicles are adequately protected, businesses must invest in specialized liability car insurance policies, such as commercial auto insurance.

Data breaches and cyber-attacks

Data breaches and cyber-attacks are significant risks for businesses in the digital age. For instance, if you keep track of your client’s personal information, such as credit card numbers, in an online database, there is a risk that your database could be hacked into and the credit card numbers stolen and then used.

Earthquakes and floods

Many standard policies exclude damage caused by natural disasters, such as earthquakes and floods. Businesses in areas prone to these risks often need to purchase separate earthquake or flood insurance policies.

Wear and tear

Normal wear and tear due to aging or regular use of the property is not covered. Over time, all properties experience some form of deterioration like rusting, corrosion, or decay.

Intentional damage

Commercial property insurance does not cover damages that the business owner or employees intentionally cause. This includes any form of intentional destruction or damage, fraud, or criminal activity.

Additional coverage options to consider for your business property

Businesses should consider various additional insurance options, such as commercial auto, business interruption, or cyber liability insurance, to achieve comprehensive protection. A well-rounded insurance portfolio is crucial not only for complying with legal and contractual liabilities but also for establishing a safety cushion capable of handling unexpected disruptions from various unforeseen circumstances. Here are some other essential insurance coverage options that businesses frequently need:

Every business, whether it’s a small start-up or a large corporation, should thoroughly assess its exposure to risks and seek advice from insurance specialists to construct a comprehensive insurance strategy tailored explicitly for commercial property insurance.

Factors that can affect your commercial property insurance premiums

So, how is commercial property insurance calculated? From location to size to age and more, when it comes to commercial property insurance premiums in Canada, there are multiple factors that can change how much you end up paying, including the following:

  • Property location
  • Property size and replacement costs
  • Building age and condition
  • Type of business
  • How many employees you have
  • Your income

Contact BrokerLink to get the right commercial property policy

For business insurance, you can contact BrokerLink over the phone or visit us in person!

We can also help answer your questions about how to improve employee well-being, small business health equity, how to handle different business claims scenarios, how to make small businesses more accessible, and more!

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FAQS about commercial property insurance

Is employee dishonesty covered by my commercial property insurance policy?

When it comes to employee dishonesty, is your business covered? While it's not considered a covered loss under commercial insurance, you will receive coverage under the liabilities portion of your insurance.

How are premium costs calculated for Canadian companies in Atlantic Canada?

Small business insurance Atlantic Canada will be calculated the same way an insurance premium is calculated for other businesses across the country.

If you have any questions, contact one of our local branches.


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