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Commercial Water Damage: Protect your businesses from flooding

Recently, water damage mitigation has become a key concern for most insurers. Many of the top Canadian insurers are still reeling from the effects of last summer’s flooding in Alberta and Toronto. Total loss estimates for just the Calgary flooding is expected to exceed $5 billion. However, the total costs may not actually be known for years to come.

Most of the resulting discussion has surrounded residential water damage prevention. However, commercial losses, and not residential claims, may have accounted for the majority of damages from these two incidents, especially considering the cost of not only the loss, but the Business Interruption exposures.

Inspections help mitigate water damage if they are focused on the key risk exposure items, such as:


Maintenance – Is there regular storm sewer cleaning? Annual inspections of roof drains, floor drains, and rain water collection systems?

Sump pumps – Are there at least 2 sump pumps in each sump? Are pumps tested regularly? Are there battery backups for these systems?

Backflow valves – Are they in place and maintained annually? Are they protecting both the domestic water lines and sprinkler systems?

Generator Fuel Tanks – In low-lying areas, or areas subject to flooding, are generator fuel tanks located in basements? Generator fuel can be contaminated if basements flood, prohibiting generator function, and preventing power from reaching the pumps.

Runoff - Does grading lead away from the building? Are there large concrete surfaces surrounding the building preventing runoff? Are adequate numbers and size of drains located at property?

Emergency Response Plans – Is there a plan in place that specifically addresses flood/water damage? Is there a documented call list? Are all control valves clearly identified?


Modern metal staircase


The maintenance on internal building systems can also prevent water damage, and should therefore be inspected. Items to inspect would include some of the following:

Repair Guidelines – Are there rules in place regarding installations by tenants/unit owners that address quality of fixtures and quality of workmanship in upgrading plumbing? Is there a list of pre-approved contractors?

Unit inspections – Regular inspections should include reviews of all plumbing connections inside a unit. Slow leaks should be addressed, along with condensation forming or other evidence of problems to reduce the potential for mould and moisture damage. Inspect radiators for evidence of leaking that has not been reported.

Central Hot water/Steam Heating – Is there proper drainage for the boiler room?

Hot water tanks – Is there a floor drain and/or a dyke to allow for a tank rupture without causing significant damage to surroundings? Are large tanks drained and inspected a minimum every 6 years? Have small tanks been replaced within past 10 years?

Pipe Freezing - Are radiators and piping protected from freezing? If there are areas susceptible to freezing, have supplemental heating and/or antifreeze solutions been used?

Sprinkler Systems – Have systems been installed with flow sensors? Are sensors monitored? Are systems inspected annually?

Water Mains – Are all mains and branches labeled and able to be isolated? Is there a valve diagram chart to allow quick shut-off in the event of an emergency?


A recent US-based study found the following results:

  • Water damage from toilets costs $2,000 to $10,000 per incident. 78% of documented incidents were caused by faulty supply lines, toilet flanges, fill valve assemblies, or toilets that backed up and overflowed.
  • Water damage from a sink averaged more than $7,000 per incident. Of these incidents, 44% were attributed to faulty plumbing supply lines.
  • The chance a water heater will leak or burst begins to dramatically increase when it has been used for more than 5 years. 3/4 of all water heaters fail before 12 years of us.
  • Roof leaks were the most frequent source of water damage in the study. The likelihood of a roof leak was even more common in regions where freezing weather, severe wind, and hail were frequent.
  • Power outages were the cause of 18% of water damage incidents involving a sump pump. Another 40% of incidents were attributed to items such as a clogged inlet screen or a faulty float switch.


We can provide a full Interior & Exterior Commercial Property Inspection along with our Commercial-specific Water Damage Prevention Supplement, which is available in all regions of Canada.

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