Business Property Risks to Watch For in the Spring | Webinar
Mar 5, 2020
On March 3, 2020, Scott and Jason of our Foxquilt team hosted a webinar discussing the spring business property risks to keep an eye out for. If you've been able to glance at the news recently, you're probably familiar with the growing concerns around flooding and condo/strata buildings in Canada. As a business owner, both of these issues can be detrimental to your business without the right preparation or the right commercial insurance coverages. Here's a recap of the topics and information we covered in our "Business Property Risks to Watch Out For in 2020" webinar - keep an eye out on our social channels for future webinars:
An Introduction to Property Insurance:
Before we dived into these two big business risks in Canada, we wanted to highlight the importance of property insurance. A business owner can take all the correct precautions and preparations surrounding their physical property but at the end of the day, it may not be enough against Mother Nature or situations out of your control. Having the right insurance coverages though can help cushion the blow if you find yourself in that case.
Property insurance refers to a series of policies that offer either property protection or liability coverage. Think: Homeowners' insurance, renters' insurance, flood insurance, and earthquake insurance - among other policies. The three types of property insurance coverage include replacement cost, actual cash value and extended replacement costs.
Replacement cost covers the cost of repairing or replacing property at the same or equal value.
Actual cash value coverage pays the owner or renter the replacement cost minus depreciation.
Extended replacement costs will pay more than the coverage limit if the costs for construction have gone up; however, this usually won't exceed 25% of the limit.
Water Damage, Climate Change and Natural Disasters
All across Canada, business and home owners have suffered massive damages due to flooding, winter storms, hailstorms and other natural disasters. As the current state of climate change progresses, natural disasters and flooding will only become more frequent and more severe. Some examples of extreme and record breaking natural disasters are the Fort McMurray wildfires, the California wildfires and most recently, the Australia wildfires.
Flooding and sewer backup have become two of the biggest risk exposures - depending on the area. Flooding contributed heavily to the $1.3Bn in damages suffered in insured damages as a result of severe weather, in Canada alone. Unlike other high-ranking years, insurers experienced damages from a range of severe weather events from coast to coast, rather than one major event. For example, the most costly event was an October storm in Eastern Canada that led to damages of $250 million. Spring flooding and major rainstorms accounted for 80 per cent of the weather events that qualified for disaster funding in the last three years.
In the event of flood warning:
-Move water-sensitive equipment into a lofted position
-Update your valves
-Keep your property in good repair
-Clear your gutters
-Check your rain spouts
-Repair your roof as needed
-Check your property insurance policy for adequate flood limits
Condo and Strata Building Concerns
Mixed-use and commercial office condo/strata buildings are on the rise but not all buildings are created equally. Many different sub-contractors become involved in developing, designing and building. Imagine all the different tasks in bringing a condo building to reality; each of those tasks may have a completely different contractor. Unfortunately though, issues with the building may not arise until many years later. Another issue to consider is that once the building is complete and possession of each unit is closed, the building is no longer the developer's responsibility. Condo/strata by-laws split different responsibilities between the building and each individual unit owner.
This lack of accountability once issues arise with condo buildings is becoming a huge problem in Alberta and B.C. already; is another province next?
Is this a reflection of poor construction or poor management?
Is it bad luck and timing?
The reality is that this is most likely a combination of the two.
Age of Buildings
Another business risk to keep an eye out for in Canada is how old your property is and what condition it's in. The age of buildings is often of concern for insurance company underwriters. As buildings age, maintenance requirements increase; and as time goes on, building codes improve. As such, older buildings often inherently pose a higher risk due to wear and tear over time as well as a difference in code and by-laws. Older building also often include dangerous materials - like asbestos - and extravagant finishes to maintain, repair or replace.
If any of these business risks can apply to your property in Canada, it would be wise to take some precautionary steps toward them. Unfortunately, accidents and bad luck can get the best of us. That's why, it is also prudent to talk to an insurance broker, review your policies and update them to protect your property from these business risks in Canada. At Foxquilt, we'll guide you through every step of your policy and make sure you have the right coverage for your needs. You can even join up with other business owners and entrepreneurs to immediately access our Foxquilt group insurance savings.
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