Floods are Canada’s most significant natural hazard. It’s no surprise that damages to business properties caused by water from internal or external sources are alarmingly frequent, making them among the most common insurance claims year-over-year. 

While there are preventative measures you can take, such as installing flood barriers or maintaining a clear drainage system, to minimize flood damage to your business, and actions to take if your property is flooded, such as immediately shutting off electricity and gas, being prepared to pay for damages beyond your control requires comprehensive commercial property insurance.

Let’s delve into the real-life experiences of seven of our clients who filed water damage claims. Their stories illustrate how business insurance played a crucial role in their recovery:

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1. Water Pipe Bursts

Our client, a barbershop owner, faced a challenging situation when a water pipe leaked into his rented commercial space during the winter. 

Most of the damages were to parts of the building the landlord was responsible for, so the landlord’s insurer handled those repairs. However, there was also significant damage to the barbershop owner’s property. 

Regrettably, the barbershop owner was forced to halt operations for an extended period, resulting in a substantial loss of income. Their business interruption insurance, a part of their commercial property policy, covered their losses, amounting to over $50,000.

2. Severe Windstorm

Our client, a dedicated restaurant owner, was struck by a ferocious windstorm. The force was so intense that a significant portion of the roof was torn off, leaving the once bustling interior vulnerable to the harsh elements. 

Rain and snow entered the premises overnight, causing a water pipe to freeze and burst. That led to additional damages to the interior of the restaurant. 

Our client’s policy covered over $30,000 in damages to their contents. Because they had business interruption coverage in the policy, it paid over $10,000 for their lost income and overhead bills during the repair period.

3. Sewage Backup

Our client owns a tattoo parlour in a multi-unit commercial space. A tenant upstairs had a toilet overflow that leaked into the tattoo parlour, causing significant damage. 

Since sanitation and cleanliness are of the utmost importance for a tattoo parlour, all of our client’s contents affected by the overflow of water had to be replaced. His commercial property policy, which included a sewer backup endorsement, covered $30,000 to replace his damaged contents and equipment.

4. Internal Water Damage

At our client’s co-working space, a water cooler on-site, which is a common amenity for the individuals from different organizations working in the communal environment, unfortunately leaked. This leak led to the damage of the flooring. 

Fortunately, our client’s commercial property policy includes coverage for tenant improvements to a leased space. This coverage has been instrumental in this situation, as it paid over $15,000 to replace the damaged flooring, alleviating a significant financial burden.

5. Water Damage From Above

Our client runs a virtual reality (VR) gaming facility on the ground floor of a three-storey building. 

A unit above had a water pipe burst, which leaked into the VR gaming space, damaging their electronic equipment. Their commercial property policy paid over $50,000 to replace the damaged electronics and other business contents.

6. Unexpected Pipe Freezes and Ruptures

Our client is a landlord of residential buildings. 

During a severe cold spell during the winter, one of their buildings had a water pipe freeze and rupture despite the building being adequately heated. Their commercial property policy covered over $19,000 for the damages caused by the leaking water to the building.

7. Damage to Expensive Equipment

Our client runs a beauty salon on a lower floor in a multi-unit building. 

Overnight, a unit above hers experienced water leakage from an appliance. Although the leak was not severe, enough water seeped through the salon’s ceiling and damaged the salon’s laser hair removal equipment. Her commercial property policy covered the $17,000 repair bill for the laser equipment.

Noteworthy Details About Water Damage Property Coverage

In all of the claims examples above, each of our clients’ commercial property policies included ‘broad form perils coverage’, a robust protection that encompasses a wide range of risks, including fire, lightning, explosion, windstorm, hail, smoke, vandalism, theft, and certain types of water damage. This comprehensive coverage is designed to provide you with a sense of security, but it’s important to understand that there are always reasons why an insurance claim may be denied.

In the claims examples featuring burst water pipes, that type of damage would be excluded if it was a vacant property or in the case of pipes bursting in the wintertime, where an appropriate temperature is not maintained.

Also, their claim may have been denied if mould had been present before the damage occurred. Mould signals negligence and a lack of preventative maintenance by the business or property owner. This underscores the importance of maintaining your property by taking proactive measures to avoid damages.

For burst water pipes and sewer backup claims, it’s important to understand the conditions under which your insurance provider will cover the repair cost. Usually, the cost to repair the pipe or sewer line is excluded, as that damage is often a result of a lack of maintenance. However, if the pipe breakage or sewer backup is sudden and accidental, your insurance provider is more likely to cover the repair cost.

How to Get Low-Cost Commercial Property Insurance

When it comes to comprehensive commercial property insurance, Zensurance is your go-to provider. We specialize in serving small business owners and sole proprietors in Canada, offering tailored solutions to meet your unique needs.

Ready to protect your business from water damage? It’s as simple as filling out our online application for a free quote. Don’t wait until it’s too late – take the first step towards protecting your business and financial wellness today.

We’ll take the hassle out of getting insured by offering comprehensive coverage through our partner network of over 50 insurance providers. Our experienced brokers will customize it to suit your specific needs and budget, providing you with peace of mind.

– Reviewed by Mohammad Samin, Senior Claims Advisor, Reagan Elly, Claims Advisor, and Alexandria Anthony, Team Lead, Property and Hospitality, Zensurance.

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About the Author: Liam Lahey

Liam is the Content Marketing Manager at Zensurance. A writer and editor for more than 20 years, he has been published in several newspapers and magazines, including Yahoo! Canada Finance, Metroland Media, IT World Canada and others.