Water is the loss you are most likely to have, and the one your policy is fussiest about.
Fire gets the attention. Water does the damage. A commercial property policy treats water as several different perils, and buying one of them does not buy the others. Which ones you hold is decided by a short list on your declarations page.
Start a quote file Read the short answer firstA pipe that bursts is usually covered.
Water arriving from outdoors is not, by default.
Backup through the drains is its own item.
Does commercial property insurance cover water damage?
Some water, not all of it, and the differences are larger than most owners realise. Water escaping suddenly from a pipe or a tank inside your building is normally covered by a standard policy. Water that arrives from outside, whether it runs across the ground in heavy rain or rises from a watercourse, is a separate item that has to be added. Water backing up through drains and sewers is a third item again, with its own limit and often its own deductible.
The reason this matters more here than almost anywhere else is simple geography. The Lower Mainland is low, flat, wet and heavily paved, so the two water perils that are optional on most policies are the two most likely to actually happen to a building in this province.
When you are reading your own policy, do not ask whether water is covered. Ask where the water came from. Inside the building and sudden is one answer. Across the ground from outside is a second. Up through the floor drains is a third. Slow seepage over weeks, or a maintenance problem you knew about, is generally not insured at all under any of them, because insurance answers accidents rather than deferred repairs. Four different answers, one word, and the declarations page tells you which of them you bought.
Each one is a separate line on the policy.
Escape of water
A pipe, a tank, a sprinkler head or an appliance line lets go inside the building. This is the one most standard policies already answer, and it is the most common commercial property claim there is. Watch for conditions about maintaining heat and about buildings left unattended, because those are where a valid claim gets argued.
Sewer and drain backup
Water coming back up through drains, floor drains or a sump that fails. It is bought separately, it usually carries its own limit and its own deductible, and on a building with any occupied lower level it is the item most worth having. A backwater valve is often asked about and sometimes required.
Overland water
Surface water running across the ground and entering the building in heavy rain or a rapid melt. This is a newer and still optional item in this market, availability depends heavily on where the building sits, and it is not the same thing as flood from a river or the sea, which is a different question again.
The income side
Every one of these can shut a building for weeks while it dries and gets rebuilt. Whether your business interruption section responds depends on whether the water peril that caused it was insured in the first place. Cover the peril and forget the income, and you have insured the building but not the business.
Three losses that turned on where the water came from.
The long weekend
A supply line failed on the Friday and ran until Tuesday. The peril was covered. The dispute was about the policy condition requiring the building to be checked while it was unattended, which nobody had read. The lesson is that the water perils carry the most conditions of anything on a property policy.
The parking lot that drained inward
An overnight downpour sent surface water across the lot and under a roller door. Nothing inside the building failed. The escape of water section did not engage because no water escaped from anything, and overland water had never been added.
The stain that had been there a while
A roof had been letting water in slowly for a long time and the damage was found during other work. Gradual damage and wear are excluded on every property policy, not as a trap but because the alternative is insurance paying for maintenance. The claim that would have been paid was the sudden one, had anyone looked earlier.
The ones that come up after a wet week.
Is flood the same as overland water?
No, and the words get used interchangeably in conversation which causes real confusion. Overland water is surface water arriving across the ground. Flood from a river, lake or the sea is a separate peril with different availability and different underwriting. Ask about both by name rather than asking about flood and assuming you covered it.
We are on an upper floor. Does any of this apply?
Escape of water very much does, and it can arrive from the floor above yours, which is somebody else’s plumbing and your damage. Sewer backup and overland water matter less the higher you are. Tenants on upper floors should read the tenants legal liability limit as well, because water travels downwards through several units.
Will a backwater valve change what I can buy?
Often yes. Insurers ask about them, some require one before offering sewer backup cover, and some price it differently. It is a small piece of plumbing that changes what is available to you, so it is worth knowing whether the building has one before the conversation rather than during it.
What does the insurer expect us to do over a shutdown?
Typically that heat is maintained, that the building is checked at stated intervals if it is unoccupied, and that water is shut off or systems drained where that is practical. These appear as conditions rather than suggestions. Read them once at the start of winter and put them into the building routine.
How do I know if my limits are enough?
Sewer backup and overland water are usually sub-limits rather than the full building sum insured, which means the number can look adequate on the page and be small next to a wet lower level. Compare each sub-limit against what that part of the building would cost to strip and rebuild, not against the value of the whole property.
Two that decide what a wet building costs you: how long business interruption keeps paying and replacement cost or actual cash value.
Not the question you had? Send your declarations page and the question with it through the quote file and you will get a written answer, not a sales call.
Find the water items before the forecast does.
It is four lines on one page. Knowing which of them you hold takes minutes and changes what a wet winter costs you.