Accurate property valuations are the foundation of effective commercial insurance coverage. Yet across Canada, fluctuating construction costs, rising inflation, climate-related risks and supply chain challenges have made it more difficult than ever for businesses to know if they’re properly insured.
Undervaluing your property can leave your business exposed to unexpected expenses after a loss, while overvaluing it may result in paying higher premiums than necessary.
Why accurate property valuations matter in commercial insurance
Property valuations play a critical role in determining how much coverage your business receives in the event of a claim. If your policy doesn’t reflect the true replacement cost of your property or assets, you may not have enough coverage to fully repair or rebuild after a loss.
Several factors influence property value, including:
- Inflation and material cost increases
- Labour shortages and wage fluctuations
- Climate-related damage and regional risks
- Changes to building codes and environmental regulations
As these variables shift, your property valuations should too — otherwise, your coverage could fall out of step with your actual risk.
The risks of inaccurate property valuations
Incorrect valuations can go both ways, each coming with its own challenges.
Undervaluing your property can leave you underinsured and exposed to significant out-of-pocket costs in the event of a loss. This risk is often heightened by co-insurance clauses, which penalize policyholders if the insured value is too low compared to the actual replacement cost. Even a small discrepancy in your property’s valuation can have a big financial impact — in some cases, commercial property owners could be out 10% to 30% or more of their claim value or annual premiums due to inaccurate valuations.
Overvaluing your property, on the other hand, means you could be paying higher premiums than necessary — without receiving any additional protection in return.
The benefits of getting your property valuation right
Accurate property valuations don’t just safeguard your business in the event of a loss — they also strengthen your position as a proactive, risk-aware organization. Here’s how:
Maximize coverage efficiency
Up-to-date property valuations ensure your policy reflects your actual exposure, helping you avoid costly coverage gaps or overpayment on premiums.
Make more informed decisions
Understanding key concepts like “replacement cost” and “market value” is essential when evaluating your policy. Our advisors will talk you through this so you can choose the right coverage with confidence.
Improve transparency and credibility
Professional property valuations support clear conversations with insurers, lenders, auditors and other stakeholders — strengthening your financial planning and claim outcomes.
How professional appraisals support accurate property valuations
Remember, accurate property valuations can help you get the right coverage at the right price. That’s why Acera Insurance works with professional, independent appraisers to truly understand the value of your property.
A professional property appraiser will consider key factors like construction type, building systems, specialized improvements, material costs, location factors and more to determine your property value.
For most commercial properties, a professional appraisal every 3–5 years is recommended — though more frequent valuations may be necessary depending on the location, industry, market conditions or financing requirements.
This ensures your commercial building is insured based on an accurate, up-to-date replacement cost — not guesswork.
In addition to helping ensure you’re not underinsured or overpaying for coverage, a professional appraisal also provides valuable documentation in the event of a claim.
Connect with an Acera Insurance advisor today to learn more about how property valuations impact your insurance coverage.
Information and services provided by Acera Insurance, Acera Benefits and any other tradename and/or subsidiary or affiliate of Acera Insurance Services Ltd. (“Acera”), should not be considered legal, tax, or financial advice. While we strive to provide accurate and up-to-date information, we recommend consulting a qualified financial planner, lawyer, accountant, tax advisor or other professional for advice specific to your situation. Tax, employment, pension, disability and investment laws and regulations vary by jurisdiction and are subject to change. Acera is not responsible for any decisions made based on the information provided.