Select Page
December 30, 2022

Commercial Property Insurance – Canada

Commercial property insurance is an essential part of protecting your business. It covers physical assets such as buildings, equipment, and inventory against damage or loss due to unforeseen events like fire, theft, vandalism, or natural disasters. Proper commercial property protection can help you recover quickly from unexpected losses and minimize disruptions to your operations.

But with so many types of coverage available and a wide range of factors to consider, how do you know which one is best for your business? In this blog post, we’ll discuss the basics of commercial property insurance and provide tips on finding the policy that meets your needs and budget.

What is commercial property insurance?

Commercial property insurance helps protect businesses from losses caused by damage to their buildings and other physical assets, for example, any inventory or equipment your business owns. It can help cover the replacement cost or replace damaged property.

Do I need commercial property insurance?

If your business owns or leases property with a significant value, then a commercial property policy could be the right idea for you. As always, you should speak to a licenced insurance broker to understand your needs fully.

How much is commercial property insurance?

In short, it depends on your business’s circumstances and what you hope to cover. The following is a list of factors that can impact your commercial property insurance premiums: 

  • Property type
  • Type of business you undertake
  • Condition of the property
  • Property Location
  • Previous insurance claims
  • The total value of your property and insured contents

What does commercial property insurance cover?

Commercial property insurance covers your business’s property from various perils, from fire, theft, and vandalism, to much more. It also covers many different items, including but not limited to the following:

  • The building your company uses (whether you own or lease)
  • Company inventory
  • Equipment
  • Office furniture
  • Laptops and other IT material
  • Exterior signs and exterior fixtures
  • Other expenses related to physical loss

A commercial property policy claim in the event of an insured peril can payout and support your business in three different ways. You should always confirm with the insurance broker whether your specific policy does or does not use any of these methods.

Repair costs.

For example, if the door to your storefront or commercial space is vandalised, your policy could cover the repair cost to keep your business operations up and running.

Replacement costs.

An example of a claim could be a loss due to fire damage. If your business suffers significant property damage from forest fires and needs to replace all its IT equipment, your policy could cover the entire replacement cost. Either getting you the exact equipment or replacing them with those of like and kind quality.

Actual cash value.

Coverage with actual cash value has a distinct difference from replacement costs. It considers depreciation and awards the value of the property at the time of loss. For example, winter storm damage causes water damage to old office furniture. The insurer would only pay out the value of the furniture then, rather than what it would cost to replace it or what it was worth when first purchased.

Not understanding these differences can cause many issues when making a claim, so discuss it with your insurer when purchasing your policy to ensure you adequately protect your business property.

What does commercial property insurance not cover?

Understanding what your commercial property insurance policy protects and equally does not protect is incredibly important.

Each insurance policy depends on the provider and will have different covered losses and insured perils. However, a standard commercial property insurance policy generally does not include these items (at least not without an additional endorsement).

Business interruption coverage

If your business needs to close for some time due to damage caused by a fire, your property insurance will only cover the property and not the loss of income from being closed down. If you stop how your business operates for some time, you could still be on the hook for many fixed and variable costs, for example, mortgage payments or employee salaries. A separate business interruption policy can cover these for you.

Equipment Breakdown Insurance

While commercial property insurance protects your contents and any buildings, there are often exclusions for expensive business equipment. In particular, if they break down due to their usage rather than an external factor, you cannot claim. For example, your welding machine breaks from usage rather than a flood or fire. In these scenarios, you will require additional coverage in the form of an equipment breakdown policy. Generally speaking, though, this is only required in the case of large and expensive machinery. Your insurance broker can help you navigate this choice with you.

Personal property

As the name would suggest, commercial property insurance policies only cover property owned or rented by the business. They do not cover your or your employee’s personal property. A general commercial liability or CGL policy is required for those circumstances.

Does commercial property insurance cover theft?

Yes, good commercial property insurance coverage will protect your business from theft.


In a nutshell, getting the right commercial property policy can be a great way for Canadian companies to protect their assets from various perils. How much coverage your business needs depends on your specific situation as a business owner. Get a quote and talk to a licenced insurance broker about the suitable options for your business and how to get the right coverage at the best price.

Written By

<a href="" target="_self">Aran Joyce</a>

Aran Joyce

Insurance Contributor

Aran Joyce is an insurance contributor for ClearlyRate. He aims to use his extensive insurance and business background to make complex insurance jargon easily digestible.