Fire, water intrusion, and on-site accidents are among the common perils threatening commercial properties on a regular basis. To learn more about Commercial Property Insurance, Crain’s Content Studio spoke with Tyson Peel, Vice President and Director, Property & Casualty, Burns & Wilcox Canada, Toronto, Ontario.
What are the greatest risks for commercial property owners today?
T.P.: Fire damage, water damage, and theft claims would be the top three risks from a property perspective. Water damage is the most frequent issue we see, which can be caused by broken pipes or sprinkler systems, or weather-related events such as flash flooding. With fire, there are isolated incidents as well as forest fires that are related to more catastrophic claims in certain regions. Commercial property owners also have to consider the liability aspect for making sure that third parties are not injured on their property, which is another serious risk. In Canada, with our cold winters, we see a lot of incidents related to snow, ice, and potholes.
What should owners be aware of relative to these risks?
T.P.: Having proper maintenance on your commercial property is very important. You will want to make sure your building is up to date and that the electrical and plumbing are up to code. For liability, that may include having the appropriate snow removal or property maintenance program in place.
What insurance policies help respond to these threats, and what are the limits and examples of covered expenses?
T.P.: Most Commercial Property Insurance policies in Canada are either a named perils form that covers up to 12 different perils under the policy or more commonly, a broad form policy. The broad form policy specifies the items that are excluded, whereas the named peril policy lists only the specific items that are covered.
Business interruption coverage can help clients cover things like rent if there is a stoppage in work. Boiler coverage is also important — if your HVAC system causes a loss, typical property policies may not cover that aspect. Commercial Liability Insurance is also important for commercial properties in the event of third-party injuries. With the digital age, some of these properties should also start looking at Cyber & Privacy Liability Insurance. We also offer legal expense coverage that can be added to Commercial Property Insurance, which can help the owners if they have legal questions.
How has COVID-19 affected the Commercial Property Insurance market?
T.P.: Small- to medium-sized businesses have generally been hit hardest by COVID-19, and the capacity for Commercial Property Insurance has been more difficult. Some businesses have moved or are now vacant, which creates a completely different exposure that must be taken into consideration. If traffic is down and no one is at the site, you could have more vandalism claims. The chance of a break and enter and theft was definitely increased during some of the lockdowns here in Canada — there were fewer individuals on the streets, and some individuals took advantage of that situation.
What are some steps companies should take or services they should invest in that complement insurance coverage from a prevention standpoint?
T.P.: Companies should take an active involvement in their risk management. For instance, they should review what they have on their books to see how they can improve the risk, which could include a property maintenance schedule and getting professional loss prevention recommendations. This can help them improve their risk and potentially their insurance pricing as well. Knowing what your commercial exposures are, and what your tenants are doing in the property, is very important. You want to have the tenants adhering to risk management practices and making the building as safe as possible.
What are the greatest opportunities for brokers to get into Commercial Property Insurance?
T.P.: Commercial Property Insurance is a main staple of the Canadian insurance marketplace. As for the greatest opportunities, the sky is the limit. It is all about relationships and who that broker might know and what they can generate from that.
What advice would you give brokers to increase their success in offering these products?
T.P.: Providing as much information as possible to the markets at the onset can help. Having a fully completed application with all the information ready to go makes the underwriter’s job much easier and helps them to provide a quote quickly.
What services or features of Commercial Property Insurance are specific to Burns & Wilcox?
T.P.: Our advantage would be that we have the opportunity to review and place risks that are a little more difficult that may not fall within the standard market. We have more autonomy to exclude a peril if it has caused a number of claims, whereas the standard market may just decline the risk completely. We have more capabilities for businesses that are harder to place.
COMMERCIAL PROPERTY INSURANCE
WHY YOUR CLIENTS MIGHT NEED IT: Protecting property vital to the daily operation of a business is very important to ensure long-term success — certain exposures could lead to financial devastation.
PROTECTS AGAINST: Loss or damage to business properties and their contents from a broad range of causes such as theft, fire, broken sprinklers and flooding, in addition to the liability aspect of third-party injuries.
EXPERT OPINION: “Companies should take an active involvement in their risk management. For instance, they should review what they have on their books to see how they can improve the risk, which could include a property maintenance schedule and getting professional loss prevention recommendations,” said Tyson Peel, Vice President and Director, Property & Casualty, Burns & Wilcox Canada, Toronto, Ontario.