Commercial Property Insurance

Commercial property insurance is used to protect any commercial property from perils, including fire, theft and natural disasters. A wide range of industries benefit from commercial property insurance in Calgary, including retailers, manufacturers, nonprofits and a variety of service providers. Essentially, this insurance provides the same coverage as property insurance—but for businesses. If you have brick-and-mortar operations, it's essential to protect your business, personal property and physical structure.

What Impacts My Commercial Property Insurance Rates?

There are a number of key factors that influence how premiums are calculated for your commercial property insurance in Calgary. Along with the typical considerations that affect rates for most types of insurance, such as claims history, experience level and demographics, here are a few factors that are specific to commercial property insurance evaluations:

• Location: Your location is a key determining factor in influencing your commercial property coverage. Factors that are considered include your building's proximity to fire hydrants and fire stations, how common theft and break-ins are in your area, and whether the building is located in a flood zone—such as along the Bow River.
• Types of Property: Certain materials are more combustible than others. For instance, if your building has a wood frame as opposed to a concrete frame, it's considered more combustible. Whereas fire-resistant walls, floors and doors will positively impact your premiums.
• Occupancy: How the building is used will also impact insurance premiums. For example, office spaces are typically considered lower risk for fire than a kitchen or auto body shop. It's important to know that if your jewellery store shares space with a restaurant, the more hazardous tenant (the restaurant) will affect the fire rating of the entire building.
• Fire and Theft: Along with external factors, like crime rates and proximity to fire halls, internal factors influence your premiums as well. Does your store have a security system and alarm? What about a sprinkler system to help combat fires? These details can also influence your business property insurance for your Calgary business.

At Krywolt Insurance, our brokers understand that each business is different, so it follows that your requirements will also be different for commercial property insurance. Calgary insurance brokers from Krywolt will work with you to find the best protection for your needs. There are a few coverage options available to you that a Krywolt Insurance broker will be more than happy to walk you through. Essentially, commercial property insurance can be broken down into two avenues:

1. Named Perils: This policy protects your commercial property from specific risk exposure named in your policy.
2. All-Risk: This option protects your commercial property against all risk factors—except those that are specifically excluded.

Standard Coverage for Commercial Property Insurance in Calgary

While policies may differ slightly between insurance companies, continue reading to discover what basic coverage is offered by standard commercial property insurance policies—and how it's designed to give business owners peace of mind.

• Basic Property Insurance: The most basic form of commercial property insurance covers your commercial space should it suffer damage from perils such as natural disasters and fire. It's no secret that Calgary is a city of weather extremes, so this is an important coverage for every local business property owner.
• Property Crime Insurance: Vandalism and theft can be devastating for your business—especially if you're not covered. Property crime coverage helps to cover the cost of loss, whether your front window was broken or your merchandise was stolen.
• Employee Dishonesty: Should one of your employees steal from you or take part in other fraudulent activities, you'll have access to the necessary resources to recover from the loss.
• Loss of Income: For most entrepreneurs, there's nothing more terrifying than suffering a loss of income due to accidents that force you to close your business for an extended period of time. This is also known as business interruption coverage, and it will help you recover for loss of income and ongoing expenses via compensation.
• Equipment Breakdown Insurance: Should your equipment break down, the last thing you'll want is to have your business interrupted if you can't cover the cost of replacement out-of-pocket. Equipment coverage ensures you're protected against financial losses in the event of a breakdown, and includes coverage for high-risk items such as specialized machinery such as processing equipment.
• Infrastructure Coverage: This coverage includes protecting store assets like furniture, exterior signs and fixtures, as well as contents/supplies, office equipment, product stock and other business assets.

Commercial Property Insurance Optional Coverages

Depending on your business, location or risk aversion, you might be inclined to protect your business beyond what is included in standard commercial property insurance. Calgary business owners, when you speak with one of our expert insurance professionals, we'll ensure you have adequate insurance coverage based on your unique needs. Some additional coverages you may be interested in obtaining include:

• Extended Business Interruption: The difference between a standard business interruption insurance policy and an extended business interruption insurance policy is that the latter compensates you until your business income is restored to what it was before your business shut down. Whereas a standard policy will only cover the cost of repairs or replacements.
• Flood Insurance: Extreme acts of nature require extensive resources to repair damage—and water damage can be especially devastating to your Calgary business. If you operate in a high-risk area, such as along the Bow River in Mission or Victoria Park, you should consider additional protection in the event of another devastating flood.
• Sewer Backup Insurance: Not only are backed-up sewers a hassle to deal with—and exceptionally off-putting for clients and employees—but it could also damage equipment, merchandise and the commercial buildings' physical structure.
• Mobile Property/Temporary Location: You may find that as your business operations expand, you have increased mobility to reach new markets, which results in regularly moving equipment and even a temporary move of your place of business. If this is the case, it's important to properly protect equipment in transit, mobile offices and property that's not stored at a fixed location.
• Commercial Drone: More and more businesses are using drones for surveying purposes, aerial photography, inspection, farming and more. Protect this valuable asset with commercial drone insurance. This covers damage and loss to the drone, ground station equipment and drone-mounted devices like cameras.
• Earthquake Coverage: If you operate a business along a fault line or in a city where an earthquake could occur, you need to have earthquake coverage. While it’s not usually covered in a standard commercial property insurance policy, this add-on will cover the cost of damage to your business’s building and property (including inventory loss) and—depending on the provider—may also cover lost business income.
• Builders Risk Insurance: If you are a home builder, renovator or another type of contractor, you may need builders risk insurance for some or all of your projects. This is a specialized type of commercial property insurance that applies to buildings that are currently under construction or going through a major renovation. If the building or building materials that are on-site and haven't been used yet are damaged, destroyed or stolen, you can expect to receive insurance compensation to replace them or cover the cost of repairs.

What is the Standard Deductible in a Commercial Property Insurance Policy?

Deductible amounts can vary between different insurance providers. Depending on your business, your deductible can range from a few hundred to thousands of dollars. When you get your commercial property insurance policy, you'll choose a deductible that makes sense for you. Generally, if you opt for a higher deductible, your insurance premium will be lower. If you already have commercial property insurance but you're not sure how much your deductible is, you can check your policy any time.

What is the Cost of Business Liability Insurance in Calgary?

The cost of your business liability insurance will vary depending on a variety of factors. However, for a small business located in Calgary, you can budget to spend around $1250 annually on basic commercial general liability insurance with a $2 million limit. This package would also include some applicable property coverage. However, the exact cost of your insurance policy is influenced by factors including:

• Industry
• Risk exposure
• Years of experience
• Location
• Number of employees
• Revenue
• Insurance claim history

What are the “Limits” on a Commercial Property Insurance Policy?

Your commercial property insurance policy specifically covers property owned by your business. This property must have either been purchased by your business or its ownership transferred from someone else to your business. It needs to be essential to the operations of your business, even if it's not directly tied to your revenue stream. An example of this would be a handyman franchise; your head office is key for your operations, although your technicians dispatched remotely are the main source of revenue.

It's important to note that while commercial vehicles could be considered business property, there are separate insurance policies—a commercial auto insurance policy—designed to protect business vehicles.

How Does Commercial Property Insurance Protect Your Business?

If you don't have commercial property insurance, your business’s most important physical assets won't be protected in the event of theft, an accident or a natural disaster. This policy protects your business’s real estate and its contents—including products, merchandise and even office supplies. It helps pay for the repair or replacement when your property or contents within the property are lost, damaged or destroyed.

Should the worst happen and you don't have insurance, your business's operations could be jeopardized. This may cripple you financially and even cause you to shut down your business.

Is Commercial Property Insurance Legally Mandatory?

When it comes to commercial property insurance, Calgary business owners should be aware that it is not legally required by the government. That's the case with most types of business insurance, with the exception of commercial auto insurance. But just because it's not legally mandatory, that doesn't mean it's possible to go without it.

Aside from the fact that your business could be threatened by the high costs associated with recovering from severe property damage caused by a fire, natural disaster, theft or other peril, you will come across many people, from leasing agents and landlords to suppliers and customers, that will require you to have the right type of insurance coverage before they will do business with you. If you're not able to provide adequate proof of insurance, you'll be forced to walk away from lucrative deals and needed contracts.

Does Your Small Business Need Commercial Property Insurance?

Whether you own or rent an office, workspace, brick-and-mortar store, restaurant or manufacturing plant, as a business owner you'll need commercial property insurance. Firstly, most landlords often require proof of commercial property coverage from their business tenants. If your business requires a loan, lenders typically also require commercial property insurance for the duration of the loan.

Secondly, even if commercial property insurance is not required—say you own the building yourself—it's still important you have adequate coverage for your business. It's important to insure equipment, inventory and the property itself. Accidents do happen, and unexpected losses can be devastating for your business. You should be prepared for the worst.

It's important to note that while your landlord might have commercial property insurance for the building your business operates out of, should an accident happen, they will not likely take responsibility for any property or contents kept within your space. For instance, if your cash till is robbed, the landlord's insurance will not protect you.

Is Commercial Property Insurance Necessary for a Home-Based Business?

That depends on several key factors, including the nature of the business and how much equipment, stock and inventory you keep in your home for business purposes. Many people assume that they don't need any additional property insurance coverage if they already have homeowners insurance in place, and that's not exactly true. You do need some type of insurance coverage for your home business, but may be possible to add a home-based business endorsement to your existing home insurance policy or tenant insurance policy, and in that case, a separate policy for commercial property insurance in Calgary is not necessary.

Is Theft Covered Under Commercial Property Insurance?

As we mentioned above, theft is covered under a standard commercial property insurance policy. This includes both the physical structure and any contents within the property. That said, it's important to note the limitations of this coverage.

In most policies, there is a stipulation that your property is only protected under your business insurance policy as long as they are on your property at the time the theft occurs. Should you take any equipment, inventory or merchandise off your business property—more than 100 feet from the location listed on your policy—the items are no longer insured.

An example of this would be if you have multiple store locations and are making a transfer of goods. If one of your employees is in transit while moving the goods—say jewellery—and they stop to pick up a coffee and the inventory is stolen out of their vehicle, you won't be protected for the loss.

If you often move goods or equipment, you need a different kind of coverage to ensure you're protected from theft while the goods are in transit. This is called an inland marine insurance policy. To learn more about an inland marine insurance policy and whether or not you need this particular coverage, speak with a Krywolt Insurance broker today.

Are BOP and Commercial Property Insurance Related?

Yes. A business owners policy (or BOP insurance policy) typically includes three types of coverage: general liability, commercial property and business interruption insurance. It's essentially an insurance package that's geared toward small businesses with low-risk profiles and basic coverage needs.

However, a stand-alone commercial property policy offers broader coverage and higher limits. This is reflected in the cost. The kind of coverage appropriate for your business depends on your needs, which is why it's important to talk to a qualified broker at Krywolt Insurance about what coverage is best for you.

What Isn't Covered by Commercial Property Insurance in Calgary?

When considering commercial property insurance, Calgary policyholders should be aware that it does not cover business vehicles, property that's been taken away from the business premises, and any perils that are either listed as exclusions in an all-perils policy, or listed as inclusions on a specific perils policy. Also, as stated above, a commercial property insurance policy does not include coverage for liability unless added specifically or by a separate policy.