Best Insurance For A High Value Property In Canada
Keeping up with the market. Even with signs of stability in some popular commercial and residential property markets, the price to own or rent real estate in many locations across Canada is higher than ever.
According to a recently released PwC study, “As the retail sector continues to grapple with disruption, the disappearance of several icons has created new opportunities for landlords, including backfilling with more resilient anchor tenants, using non-retail tenants to generate foot traffic and redeveloping and intensifying malls as mixed-use properties.”1
Related Matters: PwC: “Emerging trends in real estate 2019®“
Meanwhile in low-rise single family dwellings, “supply is tight in major cities and affordability is a major concern in Toronto and Vancouver, in part due to rising interest rates and tougher mortgage stress tests.”2 And notably, the PwC report cites that “the rising popularity of online retail is driving an unprecedented need for distribution and return centres. The sector is seeing significant rental increases for the first time in years.”3
Whether it is commercial real estate or a private residence, with resale values increasing steadily ever since the 2008-2009 recession, chances are the real estate you own might be a high value property.
What exactly constitutes a high value property in today’s Canadian real estate market?
Hint: it’s not just about market resale value. There are a multitude of factors that may potentially come into play when calculating the dollar “value” of a commercial or residential property. Here are a select few:
- What you originally paid for the property.
- The assessed value of your property. For example, MPAC assesses and classifies all Ontario properties. It is “the largest assessment jurisdiction in North America, assessing and classifying more than five million properties with an estimated total value of $2.78 trillion”4
- The price you list the property for when you decide to sell it.
- The price that a potential buyer is willing to pay for the property in comparison to equivalents that are available for sale at the exact same time.
On average, a high value residential or commercial property in Canada has rebuild value of more than $300 per square foot.
When it comes to insurance, a high value property in Halifax may look very different than a high value property in Vancouver. When you get insurance for a high value property in Canada, it is also important to understand how insurance companies view the “value” of your property.
What “rebuild value” means for a high value property
An insurer assess multiple factors when they determine a valuation for your specific property. Insurance companies take into consideration such things as the rebuild value of your property. This is the actual cost of rebuilding your property from scratch (i.e. from the ground up) to match the quality of original construction.
High value properties are often built using more expensive construction methods and materials. A high value property may also include unique, expensive features as well as higher value contents.
Insight: After a claim event, the cost to rebuild a property is typically what will be covered by an insurance policy. The cost of the land that a high value property is built on is not included in the rebuild value.
Construction costs for a full rebuild of a high value property start with demolition and run through to final finishing details. Labour, disposal of construction debris, inspections and more are all factored into the cost of rebuilding a high value property.
A high value property – whether it is residential or commercial – will generally require speciality insurance that specifically addresses a rebuild with high quality construction materials, techniques and potentially using specialized trades.
How to get insurance for a high value property
Contact an ALIGNED Insurance broker to discuss specific coverage options for your commercial and/or residential high value property(ies). Our experienced commercial insurance brokers are here to help you to determine the types of coverage that will be a custom fit for the unique needs of your property, wherever it is located in Canada.
Related Matters | Vacant high value property needs special coverage
Is your high value property ever unoccupied for more than four days? Typical property coverage can be voided if a property is left vacant or unoccupied for as few as just four days! A high value property that is empty, seasonally inhabited, infrequently used and/or periodically rented may or may not be “unoccupied”.
Understanding how an insurance company views vacancy is key when you want to get coverage for a high value property that may not always be occupied. That’s why vacant property insurance is designed to fill a key gap as well as cover common unoccupied property risks including:
- Hail, lightening or windstorm damage
- Malicious mischief on the property and general property destruction
- Squatters on the property who cause damage without the owner’s knowledge
- Sprinkler leakage
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