Insuring to Value: Is Your Commercial Property Adequately Insured?

Your commercial property is an extremely valuable and important asset. This property is most likely the operating center of your business or the businesses of your tenants. Thus, there is no question that insuring your property is necessary to limit risk and provide peace of mind in the event of a loss. With the appropriate amount of commercial property insurance, you know that the building you use, your revenue streams, and your ability to remain competitive will all be protected.

But how do you know that you do in fact have the right insurance policy, more specifically, the right amount of insurance coverage for your asset?

The fact of the matter is that many commercial properties are simply not insuring their assets to an adequate amount. If you are unsure whether you are fully insured, consider the following:

  • On average, contractors in Canada are pricing new non-residential builds 2.7% higher than just last year
  • Construction cost per square foot of an average commercial office building in Canada went from $248 in 2017 to $255 in 2018
  • In the first quarter of 2018 alone, construction cost on average rose 1.4% for new industrial buildings
  • Disruption in Canada-US trade relations are expected to drastically affect lumber and steel costs in Canada

There are two cases to consider regarding inaccurate insurance coverage:

Excessive Coverage

Over insuring will certainly provide you with security in the case of a loss, but the premiums paid out to your insurer will be unnecessarily high. This scenario is certainly less common than the alternative.

Inadequate Coverage

In 2008 the Canadian Underwriter estimated that 60% of commercial buildings are undervalued by 40%. Under-insuring your property will put you in a position of significant risk as you are at jeopardy of not receiving full value for your property if you ever experience a loss. Having the appropriate amount of coverage is essential to recovering from any significant loss, limiting the downtime of your business, and remaining competitive. Many think of worst case scenarios – the total loss – and attribute a very low probability to such an event. However, under-insuring your asset will negatively affect you even in the event of a partial loss. Many insurers will apply coinsurance clauses and portion the claim to the total insured amount.

Take for example a building that has insurance of $10,000,000 but the actual replacement cost is $11,000,000, a 10% difference. A partial loss takes place, costing $500,000 to which the insurer then pays out only $450,000, a 10% differential as determined by the condition of average based on total insured amount. Due to a lack of sufficient insurance on the property, you could be held personally liable for the remaining $50,000.

Why is underinsuring commercial property so common?

There are many considerations and possible mistakes that can take place when estimating the replacement value of a commercial property.

  • Failing to include all items of common property
  • Inaccurately determining demolition and removal costs.
  • Calculating the value based on market valuations, purchase price, original construction cost, etc.
  • Ignoring building code changes or bylaw changes that would affect the cost to rebuild

For an in-depth article related to the above, visit this post by Tim Rogers.

In short, there are a multitude of reasons for under-insuring. The most prominent being the lack of an expert appraisal from an accredited professional third party. At Normac, we have been completing insurance appraisals for over 20 years. Across Canada, we are trusted by commercial property owners and managers to assess and report on their properties’ total insurable value. If you are interested in having your commercial property appraised to ensure that you are sufficiently insured and protected, reach out to us HERE for a no-obligation quote. We promise you will receive an accurate appraisal, with the highest level of quality and service.

Sources: Canadian Underwriter, Altus Cost Guides 2017 & 2018, Stats Canada.

AEDs Save Lives in High-Rises

There are a lot of perks to living in a downtown high-rise. Shared amenities, access to nearby shopping and restaurants, and the ability to walk to work are just a few of the reasons why some people might choose to live in an urban dwelling. But what if you knew that the home in the sky that you love could restrict your access to life-saving medical attention in an emergency? Would you still choose to live there? For one Vancouverite, this predicament was all too real when he had a heart attack in his apartment on the 23rd floor.

The Vancouver Sun recently posted a story about local downtown resident, Tony Flagan, who was considered medically dead after his heart stopped beating for three minutes. Flagan had been swimming laps in his building’s pool when he returned to his unit and began to experience symptoms of a heart attack –  the same way his mother had passed away in her own high-rise apartment more than 30 years earlier. Because of the way in which his mother passed, Flagan knew that he needed to get out of his unit and down to the lobby to increase his chances of survival. He called 911 and made his way to the building’s entrance where paramedics found him non-responsive. The emergency responders were able to resuscitate Flagan and rushed him to St. Paul’s Hospital for emergency surgery.

Now, Flagan has convinced his strata to invest in some automated external defibrillators (AEDs) in the building so that there is close-by access in the case of an emergency. He, along with St. John Ambulance, are encouraging other high-rise strata and condo corporations to do the same. With cardiac arrest, brain damage can occur within three to five minutes of the heart stopping, and chances of surviving decrease by 10% after every minute that passes. BC Emergency Health Services claimed that on average last year, it would take approximately nine minutes for ambulances to respond to an emergency.

Chances of survival after cardiac arrest in a high-rise. Infographic by National Post.What’s worse for residents of high rise buildings is that if you live on the 25th floor or higher, the chances of surviving a heart attack are zero (see infographic). The extra time that it takes emergency responders to reach residents that far up increases due to limited access to buildings and slowdowns from elevators. With access to AEDs, family members, friends, or neighbours might be able to help more quickly than a first responder. The devices are extremely easy to use and provide audio instructions to ensure successful operation of the equipment.

Vancouver is Canada’s densest city, followed by Montreal, Toronto, Mississauga and Calgary. With nearly 200,000 people living in condominium units five storeys or higher in Vancouver alone, the benefits of access to and awareness of automated external defibrillators are critical. The cost is between $1,000 and $3,000 per unit and experts recommend that they be as accessible as fire extinguishers. St. John Ambulance provides AEDs training and is currently working on a campaign to get the medical instruments into more high-rise buildings.

It would be prudent for strata and condo corporations to consider the investment for their high-rise buildings and provide access to information regarding how to use them, where to find them, or what to do in the case of an emergency. To further cultivate a sense of community within the strata or condo, it’s important for neighbours to have each other as emergency contacts. If it takes more than 9 minutes for an emergency responder to arrive on the scene after calling 911, think of how much your neighbor or spouse can accomplish in that same time with the proper medical equipment. They could save a life.

Critical Emergency Preparedness Tips

Normac recently sponsored a Strata Educational Seminar hosted by CCI Vancouver about Disaster Planning and Emergency Preparedness. The seminar was presented by Jackie Koosterboer, author of My Earthquake Preparedness Guide and an Emergency Planner at the City of Vancouver.

According to the Auditor General of BC in a recent Catastrophic Earthquake Preparedness report, experts estimate that there is a 12% chance of a “catastrophic earthquake” hitting BC within the next 50 years and the price tag on that could equal as much as $75 billion. While the Province of BC and City of Vancouver have been proactive to prepare bridges and emergency responsiveness to an earthquake, there is much that each of us can do to prepare our own homes and families in the case of a catastrophic event.

Attendees were given 10 tips to prepare their own family emergency plan.

  1. Identify hazards – Determine what different types of hazards could affect each of us and the areas we live in and figure out how to prepare for them. This could mean earthquakes, tsunamis, fires, power outages, weather events, etc.
  2. Select a family meeting place – It is important to designate a location that is not your home for everyone to meet at in the case of an emergency. Ideally it is within walking distance for people. This way if you are unable to contact one another, you know in advance where you can find your loved ones.
  3. Determine an out of area contact – During an emergency, it is prudent to have a designated, out of area contact person who each of your family members can reach and provide updates to. It can sometimes be easier to contact people long distance as local lines may all be tied up. Using other forms of communication could also be useful, such as text messaging, or social media. Facebook has a safety check feature where individuals in an area impacted by catastrophe can mark themselves or others as safe.
  4. Prepare and store emergency kits – There are various types of kits that you can have. A grab and go kit such as a back pack is useful in the case of a fire as you can quickly grab pre-packed essentials such as clothes, medications, ID, and cash. Home kits will be much larger and require more items in case you are stuck in your home without power or running water. Other kits include car kits, school and work kits, first aid kits, and pet kits.
  5. Have enough food and water available – Canned food items that require little to no preparation are ideal and don’t forget a can opener. The recommended amount of water required per person, per day is 4L and you should have enough to last each person three days. For a family of four, that’s 48L of water!
  6. Prepare your home for an emergency – Securing heavy objects such as book cases will prevent them from flying across the room. Securing the hot water tank can prevent a gas leak from occurring. Attaching door fasteners to your cupboards or moving heavy objects to lower cabinets will prevent further damage and injury. Additionally, knowing that your alarms and extinguishers are working and where all your shut-offs are located is imperative.
  7. Work preparedness – Consider what you will do if an emergency happens while you’re at work. For example, do you have supplies, or how will you get home?
  8. Plan for the vulnerable population – Have a plan in place to ensure that your children, elderly family, or people with disabilities looked after. Do you have another adult known to your child’s daycare who can pick them up in an emergency? How will your 4th floor neighbour in a wheelchair get to safety if the elevator is broken? Discuss these in advance so that you can act quickly in an emergency.
  9. Same for pets – Your pets are part of the family so don’t leave them behind! Have grab and go kits prepared for each animal that include food and water, a leash, blanket, and any vet records.
  10. Practice – Practice your plan so you and your family know what to do. Know your evacuation routes. Know your meeting place. Know your out of area contact’s phone number. Have regular drills and check the expiry dates on your kits each time the clocks change in the Spring and Fall.


So, how prepared are you in the case of an emergency? You can view Jackie’s full presentation here. You can make your own at home emergency preparedness kits or order them online. Whichever you prefer, make sure you have necessary items available and accessible, and a plan in place to protect yourselves and the ones you love.


Condo Board Governance

Condo Board in Toronto

The Ontario Ministry of Governments and Consumer Services is currently implementing changes to the governance of condo boards in Ontario. These changes come after a string of legal problems were uncovered earlier this year.

Three men are being accused of hijacking condo boards in condominiums where they did not own units.  They had taken over a dozen condo boards and managing operating budgets of up to over $2M. The three have allegedly forged signatures on proxy votes during elections, increased condo fees while not maintaining the properties or assets, and have contracted their own companies for services higher than market value. Now legal action is being taken by owners who are frustrated that they have been taken advantage of.

To protect owners, the Ministry will be implementing the following new laws, as described by CBC News.

  • All board candidates will have to disclose whether or not they own units in the building where they wish to serve on the board.
  • All condo boards will be required to provide regular updates to ensure better communication between owners and the condo board.
  • All rules will be more clearly defined so that condo owners can access records more easily.
  • To make it easier for owners to participate in meetings, new voting rules, notices, and quorums will be implemented.
  • All condo directors will go through mandatory training.
  • All condo managers will require mandatory education as part of their licensing program.

In addition to the new rules, two new condo authorities will be introduced in Ontario.

The Condominium Authority of Ontario (CAO) which will provide awareness to and educate condo owners on their rights and responsibilities, as well as oversee the Condominium Authority Tribunal which resolves condo disputes.

The other is the Condominium Management Regulatory Authority of Ontario (CMRAO) which will regulate and provide licenses to condo managers.

While these changes are taking effect in Ontario this Fall, the rest of Canada can help to protect their properties by being diligent and keeping their condo boards or strata councils accountable. Here are some useful tips provided by CBC News (full article here):

  1. Know who the members of the board are and don’t be afraid to ask questions.
    Are they financially literate? Do they have any business experience? Is there a conflict of interest between the condo board member and a selected service provider? Is the property manager independent of the board?
  2. Research your building’s bylaws and declaration.
    Know the rules and regulations by which the condo or strata board should be run so that they can be held accountable. The more you educate yourself, the better position you will be in to determine if something doesn’t seem right.
  3. Make your voice heard and get involved.
    To see if your condo board is running efficiently, request documents such as meeting minutes or monthly financial statements. If you’re unhappy with the response, get involved. Any owner can run for to be on the board, but you must be prepared for the time commitment.
  4. Get professional help.
    Not only can a property or condo manager assist a condo board or strata council to ensure smooth operations, but it is also the responsibility of the board or council to hire professional service providers. Only hire professionals to complete your appraisals, engineering, maintenance, and repair work, and your reserve fund studies.


Carbon Monoxide Detectors Now Mandatory

Earlier this year, the City of Vancouver updated its bylaws to make carbon monoxide detectors mandatory for all buildings with gas-fueled appliances or attached garages. This comes after 4 people died from carbon monoxide (CO) poisoning in March and a recent slew of close calls in Vancouver. This means that buildings or houses with residential occupancy must meet minimum requirements based on proximity to a gas appliance or garage. In many cases, multiple detectors are required to ensure proper compliance and safety.

Many people think that they can detect carbon monoxide on their own, as is the case with natural gas which has a pungent odour. But carbon monoxide is colourless, odourless, and a highly toxic gas. When inhaled, it prevents the transfer of oxygen through the blood to the cells in the body.  In North America, it is the leading cause of accidental poisoning death.

Some sources of CO include car exhaust fumes from idling cars, wood or gas-fueled appliances such as cooking ranges and water heaters, and fireplaces or furnaces without proper venting. If any of your gas appliances are malfunctioning, you should have them serviced right away. Even if you do not have a gas- fueled appliance, it is possible for carbon monoxide to leak into your home.

You can get your own electrical carbon monoxide detector at any hardware store that plugs into a standard electrical outlet, but it should have a battery pack in case of a power outage.  If your detector goes off, you and everyone in the home should exit immediately and call 9-1-1. Check that no one is experiencing carbon monoxide poisoning symptoms, such as dizziness, nausea, shortness of breath, confusion, or blurred vision. It is a good idea to try and shut off the carbon monoxide at the source and ventilate the home by opening all the windows and doors.

In addition to the new carbon monoxide detector bylaw, the city is increasing penalties for other fire related behaviour in an effort to curb exorbitant or unnecessary use of city services. For examples, home owners can be fined $750 per day for leaving a house unsecured, $500 for falsely setting off a fire alarm, and $500 for discarding burning materials, such as tossing a cigarette butt out of a car.

To learn more about the new bylaws, you can read about them on City of Vancouver website here.  For helpful diagrams on how many and where to place carbon monoxide detectors, check out this City of Burnaby brochure.

Dangerously Old Elevators

A while back, we published this blog about old elevators in major Canadian cities leading to unanticipated repair and replacement costs for strata corporations. The causes are multi-fold; with so many elevators reaching the end of their life, and an increase in use due to rising populations, specifically among the elderly, elevator technicians have not been able to keep up with demand, leaving long wait times for repairs and many people stranded.

New research however is citing additional repercussions such as injuries and even death due to faulty machinery. As elevators become older, they start to have leveling issues, mechanical problems, and electrical malfunctions.

Some examples of these are when the elevator does not stop flush with the floor and causes people to trip in and out of the elevator. Other users have been caught between the car and door, crushing people and resulting in amputation. Electrical fires are combusting spontaneously, some causing minor damage to wiring, and others causing major damage to properties. As well, the unexplained loss of hydraulic oil is causing some elevators to stop or drop suddenly, leaving people wary of dangerous and old elevators.

The Technical Standards and Safety Authority, which regulates elevators in Ontario, says that the number of elevator related incidents has more than doubled between 2011 and 2016 and continues to rise annually by a rate of 14%. Over 1200 people have claimed injuries due to faulty elevators, 69 individuals have been permanently injured, and there have been 6 deaths reported.

While faulty, old elevators are certainly a concern, it’s also important to note that many of the injuries reported are caused by “user behavior” – meaning that people are either distracted and being struck, or purposefully trying to prevent the doors from closing and then getting hurt. While prevention of these types of injuries seems easily achievable, it does not eradicate the need to perform routine maintenance to ensure the full life span of an elevator or to ensure there are adequate reserve funds for replacement.

Normac’s Certified Reserve Planners and Engineering Professionals can help you by preparing you for these costs with a Depreciation Report. For more information on Depreciation Reports & Reserve Fund Studies, email or call us at 604-221-8258.

To read the original article by Colin Perkel of The Canadian Press, click here.

The Importance of Building Codes and Bylaw Reviews in Insurance Appraisals

Update:  The blog post below was originally posted on December 14, 2016.  It has since been announced that an update to the BC Building Code will require fire sprinklers to be installed on the balconies of all new four-storey wood-frame buildings.   The new sprinkler requirements will take effect on July 20, 2017.

“B.C. is a leader in fire safety requirements, but we continually review those rules and update them. Although the next edition of our building code won’t be adopted until late 2017, we wanted to implement this change as soon as possible, in the interest of safety.” -Rich Coleman, Minister of Natural Gas Development and Minister Responsible for Housing 

For more information, visit the BC Government’s website or click here for further information.  

_ _ _ _ _ _ _ _ _

The recent fire in Langley, BC  highlights the importance of getting a proper replacement cost insurance appraisal that includes a Building Code and Bylaw review.  To summarize the events – a fire started on one of the upper unit’s balconies, made its way into the attic space and then quickly spread from there.  This Vancouver Sun article states that Fire Chiefs have been lobbying for years to have the BC Building Code requirements strengthened for sprinklers in attics and balconies in wood-frame buildings under 4 storeys.

While it may be true that changing Building Codes and Municipal Bylaws is usually a reactive exercise versus a proactive one, the fact is that they do change.  Unfortunate events such as the Langley fire, lobby group efforts, as well as internal research done by the keepers of the Building Codes, leads to real changes in construction standards that affect the costs of construction for a new build.  Part of our job is to keep abreast of changes to the Codes and Bylaws and make any necessary changes to our analyses and reports.

Done correctly, an insurance appraisal will determine what fire protection requirements have changed since the original date of construction, and adjust the Total Insurable Value (TIV) accordingly.  In a total loss scenario, the property would have to be rebuilt with the new standards in place for fire sprinklers, fire standpipe systems, fire alarm systems, fire walls, and fire breaks.  The costs for adding these components can be significant, so make sure your appraisal includes a proper review.

For more information or for a no-obligation insurance appraisal proposal, email us at or call us toll-free at 1.888.887.0002.

To read the article as it originally appeared, click here.
Photo:  Richard Lam, PNG


Normac’s Cam Carter Joins Quay Pacific’s Strata.Life Segment on CISL 650

On February 8th, 2017, Normac’s Cam Carter joined Drew Grout, Quay Pacific’s Director of Strata Services and Alex Limongelli, Public Sector Manager, BC at Waste Management Canada for a conversation on all things strata as part of the Experts on Call show series on CISL 650AM .

The overarching goal of Strata.Life is to provide accurate, timely information and expertise across the spectrum of strata property living:

  • Repair and maintenance expertise
  • Keeping interactions positive
  • Strata legal updates
  • Educational videos
  • Strata lifestyle
  • Strata governance
  • Information to help resolve conflicts

Watch the YouTube video below to gain expert insight on strata life and how to effectively manage it. For specific questions regarding Normac and our appraisals, depreciation reports and building science services, please email



Deferred Repairs, Costly Future Expenditures

It is surely a welcoming development to see increasing awareness of building maintenance and repair requirements among strata  and condo owners. Having said that, it continues to be a constant challenge to convince the majority of the owners to agree on some necessary repairs or replacements, particularly if they are of larger magnitude.

Through our past and continuing interactions with thousands of strata and condo owners, we notice a common theme. “We will never get any repairs done until there is a major turnover of ownership”, “everyone just votes no, no, no to everything”, “no one wants to spend any money” are unfortunately some of the disheartening cries of many concerning owners wanting to protect one of the biggest investments of their lives.

Undoubtedly, it is unrealistic to expect owner approvals for repairs without conclusive evidence. To the credit of many strata and condo owners, they understand the necessity to obtain an assessment report to gain such evidence. However, far too often, we see owners acquiring an excessive number of inspection reports from various consultants for the same issues and optimistically expecting more favourable results. And to worsen the situation, the professional advice acquired by spending thousands of dollars is often ignored.

Unfortunately, many building issues like with rot and mould do not stand still in time. Deferred repairs are likely to promote further deterioration, resulting in repair costs that exceed the original estimates. While a strata or condo corporation is generally self-governed, extreme negligence to building repairs that may impact the safety or well-being of the occupants can be brought forth to the higher courts. The following article by Keith Fraser of the Vancouver Sun documents the story of a judge imposing a $16.8 million special levy on a Vancouver condominium.

A comprehensive understanding of the lifespan of a strata or condo’s building components is paramount to planning and saving for current and future expenditures.  Normac has a team of experienced engineers and building science specialists that can assist stratas or condos with building condition assessments and depreciation reports/reserve fund studies. For more information or to request a proposal, please email us at or call us toll free at 1-888-887-0002.