For Canada’s urban retailers, simply having a storefront can now bring growing insurance headaches.
According to Danish Yusuf, CEO of Zensurance, the biggest challenge facing businesses with a physical footprint – particularly those located near water or other natural hazards – is the rising cost and tightening conditions of insurance coverage.
“Coverage is still available for most retailers,” he said, “but the conditions attached to it have become significantly less forgiving over the past 12 months.”
Smaller operations, such as independent convenience stores, typically hold less property on-site and therefore represent a more manageable underwriting risk.
But for larger retailers – think Dollarama-style outlets stocked with substantial inventory – the stakes are much higher. In the event of a fire or flood, the potential losses escalate quickly, which insurers are now factoring more heavily into their rates and coverage conditions, he says.
When it comes to fire, Yusuf noted that most commercial policies still include it as part of the base coverage and adds that it’s rare to encounter a policy that explicitly excludes fire damage.
In contrast, flood and earthquake risks are often treated differently – with coverage that may be restrictive or tied to stricter conditions. As a result, retailers need to pay much closer attention to the terms of their flood protection than they might with fire, he said.
The coverage conditions, Yusuf added, mostly pertain to higher deductibles, more restrictive policy wording, and reduced access to certain protections.
Instead of broad form policies, businesses may now be offered named-peril coverage, which limits them to only specific risks. In some high-risk areas, flood coverage may not be available at all, regardless of what a retailer is willing to pay.
While many retailers are now seeing more restrictive insurance policies, Yusuf clarified that the actual premium rate hikes occurred earlier – mostly between 2021 and 2023. Over the past 12 months, the pricing itself has stabilized, even as coverage conditions have continued to tighten.
“In the last year, we haven’t seen a meaningful shift in rates,” he said. “Changes in conditions, yes. Also higher deductibles and tweaks in limits, but actual rate-wise, no.”
He added that smaller businesses – which he defined as those that make “under a few million dollars” in annual revenue – have even seen modest reductions in premiums recently.
“Their claims performance has been better, and we've leveraged that to negotiate discounts with insurers,” he said.
In addition to property and flood-related concerns, urban retailers are also facing elevated risks tied to theft – particularly from third parties. Yusuf said that over the past two years, there’s been a noticeable uptick in incidents involving break-ins and the theft of high-value merchandise such as cell phones, electronics, and vaping products.
While these thefts are not attributed to employees, he warned that they represent a growing concern, especially for stores carrying compact but expensive inventory.
However, when it comes to vandalism, including graffiti or damage from smash-and-grab attempts, the overall claims activity and insurer response have remained relatively stable, and Yusuf said that there hasn’t been any meaningful shift in how insurers are treating vandalism-related risks in retail storefronts.
He added that the difference in impact explains why theft and crime tend to receive less attention in insurance conversations: a single flood can damage thousands of structures at once, whereas a crime wave might affect only a dozen or so storefronts in a given neighborhood.
“That’s still pretty bad, but the losses that the insurance companies face are much more concentrated when it comes to flood or fire,” he said.
Yusuf said that brokers and insurance providers have an increasingly vital role to play – not just in underwriting coverage, but in educating retailers and helping them adapt.
Client education, he said, is a crucial step in helping retailers understand both their business vulnerabilities and their insurance options.
That includes targeted content focused on practical risk mitigation measures, such as installing security cameras and deadbolts for high-value inventory.
Beyond general advice, Zensurance also sends regular updates flagging new coverage options or industry developments – such as recent foodborne illness outbreaks – with tailored recommendations and reminders about relevant protections.
“We say: This is happening. Here's an insurance product that could protect you, or here are some tips in order to reduce your risk.”
