Commercial property · Nova Scotia
If your building values are five years old, you are underinsured.
Construction costs in Nova Scotia have moved faster than most property schedules have. That gap does not show up until you claim, and then a coinsurance clause turns it into your problem. I write coverage for landlords and property owners across HRM and the province.
Apartment buildings · Strip plazas · Mixed-use · Office · Warehouse · Vacant & transitional
What actually goes wrong
The coinsurance penalty
If the building is insured below its replacement cost, a partial claim gets reduced in proportion. This is the most common and most expensive problem I find on commercial property, and it is entirely preventable.
A unit goes empty
Most property policies restrict or suspend coverage after thirty days of vacancy. Tell your broker before the tenant leaves, not after the pipe freezes. It is a phone call, and it is the difference between a paid claim and a denied one.
Water, not fire
Frozen pipes, failed sump pumps and sewer backup drive more building claims than fire does. Water deductibles and sub-limits are where insurers have tightened hardest, and where policies quietly get worse at renewal.
Your tenant changed what they do
A retail unit becomes a takeout kitchen and the risk profile of the whole building changes. Insurers expect to be told, and your lease should require tenants to carry their own coverage and name you on it.
What a property policy usually covers
- The building at replacement cost, ideally supported by a current valuation rather than what you paid
- Rental income for lost rent and continuing expenses during the rebuild
- Commercial general liability for slips, falls and common-area injuries
- Equipment breakdown for boilers, elevators, HVAC and building systems
- Sewer backup and water damage, with deductibles you have actually read
- By-law coverage for rebuilding to current code, which on an older building can exceed the loss itself
- Umbrella liability, frequently required by lenders and mortgagees
What I’ll ask you for
Addresses and square footage, year built, the dates of your roof, wiring, plumbing and heating updates, construction type, tenant mix, annual rent roll and any losses in the last five years.
Update dates matter more than the building’s age. A 1960s building with a new roof and panel prices better than a 1990s one with neither.
Questions I get asked
What is coinsurance and how does it hurt me?
Coinsurance is a clause requiring you to insure the building to a set percentage of its replacement cost, commonly eighty or ninety percent. If you are below that when you claim, the insurer reduces the payment in the same proportion you were short. Insure a building for six hundred thousand when it costs a million to rebuild, and a two hundred thousand claim does not get paid in full. Nothing about the claim was your fault. The shortfall was.
Should I insure for replacement cost or market value?
Replacement cost, always. Market value includes the land and reflects what someone will pay for the income. Replacement cost is what it takes to rebuild the structure at today’s material and labour prices. In parts of Nova Scotia the two numbers are far apart in both directions, and only one of them is what your insurer will be writing a cheque against.
My building is between tenants. What do I need to do?
Tell your broker as soon as you know, ideally before the unit empties. Most policies restrict coverage once a building has been vacant thirty days, and some suspend water damage and vandalism entirely. A vacancy permit keeps the coverage in force while you re-let. It costs a little. Discovering the restriction after a burst pipe costs a great deal more.
Is your building insured to value?
Send me your declaration page and I will tell you where your values sit against today’s replacement cost.
Rayanur Rahman 