How Much Does Commercial Property Insurance Cost?

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What Is the Average Commercial Property Insurance Cost in Canada?

How much commercial property insurance may cost your business depends on many factors. The primary factor, however, is the value of the building and your assets. It’s wise to establish an in-depth inventory of your physical contents and their replacement values to know the level of coverage you need.

A small business may pay between $500 and $1,000 annually for commercial property insurance, but it could be higher depending on the size of your business. What you need to insure, the property value, and how that property has been protected will be factored into your policy. Other variables include updates on buildings, neighbouring exposures, and how the property you are occupying was built. Additional factors that influence the cost of a commercial property policy include:

• The location of your business. If the neighbourhood where your retail store, office, or warehouse is in an area with a high number of break-ins or vandalism, or if it sits on a floodplain, your annual premium is likely to be higher.
• The building’s occupancy. How many people (customers and employees) are legally allowed to be inside your office or store at any time? The larger a property is, and high foot traffic likely means you have higher occupancy risks.
• The value of your contents and inventory. Does your company have expensive machinery, equipment, and electronics? Do you store pricy merchandise on the premises? Tally them up to get an accurate picture of what it might cost to repair or replace those items if stolen, damaged, or destroyed. That includes your furniture, the building’s fixtures, lighting systems, outdoor signs, office supplies, and customer and employee property while on-site.
• Replacement cost. What is the cost to replace a building and its contents if destroyed by an insurable loss? The replacement cost is determined by the square footage of the building, its composition, and the value of your contents.
• How old the building is. A century-old building has tremendous charm, but it also costs more to insure. That’s because the older a building or physical structure is, the more likely damage or loss will occur. Newer commercial properties tend to get lower premiums since they usually were built with fire-retardant materials and have automated sprinklers and modern HVAC systems.
• The state of the building’s plumbing. Water damage is one of the top causes of insurance claims in Canada, and the number of such claims rises each year as the severity of storms increases. The Insurance Bureau of Canada says claims from severe weather events have more than quadrupled since 2008, with the “new normal” for insured catastrophic damages in Canada at an eye-watering $2 billion a year. With that in mind, think about the type of plumbing on your property. Older buildings have installed galvanized or lead piping and usually lack a sump pump and backwater valve, upping the likelihood of water damage or flooding.
• The type of electrical work in the building. An older property may also have outdated electrical work that can lead to potential fires. For instance, a building with knob and tube wiring will raise a red flag with insurance providers because it’s obsolete, lacks grounding wire, and can’t handle the power demands of modern appliances and electronics.
• The coverages you choose for your policy. You can add optional coverages to a commercial property policy, such as business interruption insurance, equipment breakdown insurance, overland flood protection, sewer backup coverage, and earthquake insurance. Adding these will increase your premium. Moreover, the coverage limits and deductibles you choose also affect your rate.

3 Examples of What a Commercial Property Insurance Policy Costs

Although there are many factors that go into determining the price of a commercial property policy, here are three examples of how much a policy may cost:

1. A building owner who also insures their equipment and stock. They include business interruption, equipment breakdown, and other coverages, including overland flood protection, sewer backup, and earthquake insurance. 

Total insured value: $1 million. Approximate annual premium: $3,500 to $5,000.

2. A business owner that leases a commercial unit and makes improvements to its interior, and who adds business interruption, equipment breakdown, and other coverages, including overland flood protection, sewer backup, and earthquake insurance. 

Total insured value: $500,000. Approximate annual premium: $1,800 to $2,800.

3. A business owner who is only insuring their stock or equipment, and includes some of the other coverages like business interruption, equipment breakdown, and other coverages like overland flood protection, sewer backup, and earthquake protection. 

Total insured value: $100,000. Approximate annual premium: $1,300 to $1,500.

How to Reduce the Risk of Property Damage to Your Business

You can reduce the chances of damage to your business property and having to file a claim by taking a few steps to mitigate your risks, such as: 

• Install a monitored security and smoke alarm system. Have bright lighting installed inside and outside the building to keep thieves, vandals, and arsons at bay, have strong deadbolt locks on all doors and get burglar-proof windows and doors.
• Ensure regular maintenance to the property is conducted and fix anything that needs repair.
• Know where the water shutoff valve is to prevent a burst water pipe from flooding your building and ensure the building’s eavestroughs are clear of debris and downspouts are pointed away from the structure.
• Protect your building and contents from moisture damage and mould by controlling the heat and humidity. Installing a smart thermostat can make this easier. Also, ensure the building’s HVAC system is in tip-top condition.
• Protect the exterior of the building from severe weather. Throughout the year, be prepared for rain, snow, and windstorms that could inflict damage. Keep trees and shrubs on the property trimmed and eliminate excess debris around the property.
• Install water detection devices to reduce the chances of significant water damage, and have licensed professionals inspect your plumbing and electrical systems annually to prevent minor problems from becoming big ones unexpectedly.
• Do a walkabout of the property inside and out and look for cracks in walls and the foundation to see if there’s potential water damage. Also, check the ceiling for signs of a leak coming from above.
• Document all property inspections and repairs to your building and its fixtures. That will make it easier to maintain an inspection schedule and track issues that must be addressed.

How to Get a Commercial Property Insurance Policy

Lose the hassle and confusion of buying commercial property insurance by getting a free quote from Zensurance. Let our friendly brokers find the policy you need from one of more than 50 insurance providers in our partner network.

Fill out an online application to get started. We’ll take care of the rest and let you get back to serving your customers and growing your business.