See how a 28-storey office used real-time leak and temperature alerts to cut its commercial building insurance deductible by $150k, while protecting asset value.
The catalyst for the reduction in their commercial building insurance? The installation of a smart sensor system, which helped avert millions in potential water damage claims.
Here we will share how this property owner achieved the substantial deductible reduction through proactive risk management. Rising costs, particularly due to water damage claims, can be managed with smart sensors. Solutions are available, and results are already being seen.
Understanding the Forces Shaping Commercial Building Insurance
Insurance costs for commercial buildings have increased sharply in recent years. Commercial property rates increased by an average of 11% by the end of 2023; reinsurance rates have also risen. Insurers are scrutinizing risk more closely than ever.
Location and environmental exposure play a large role in determining rates (source). Claims history, occupancy, and property use can also affect premiums (source).
Where your building stands matters. More so, your claims history has a direct influence. Properties with current, proven risk management practices can earn lower rates. On the other hand, properties with higher risk profiles will see elevated premiums and deductibles.
This evolution is clear: proactive risk management receives recognition from insurers. Waiting until losses occur results in higher costs. Prevention mitigates rising commercial building insurance costs and helps create leverage at renewal time.
Your building’s physical state, maintenance routines, and capacity to detect issues early are all considered. Demonstrating that your property is managed to a high standard can make a meaningful difference for your coverage.
Water Damage: A Primary Driver of Insurance Cost Increases
Water damage claims are a persistent theme. These claims account for 50% of all commercial real estate insurance claims. This isn’t just a minor factor, it’s among the most significant risks facing commercial property.
Causes are well understood. For interior water damage, toilets account for 15 per cent, roofs for another 15 per cent, and sprinkler systems for 14 per cent. Combined, these categories account for nearly half of all incidents inside commercial properties.
The broader issue is chronic: about 75 per cent of water losses result from accidental discharge, such as failing plumbing infrastructure, HVAC systems, or common appliances. Most incidents are not catastrophic bursts, but slow leaks that evade detection.
The financial repercussions in Canada and beyond are significant. Insured commercial losses in 2024 exceeded $1.7 billion as a result of severe weather, making it the costliest year for commercial insurance claims in almost a decade. Every incident reported can elevate future premiums and deductibles at renewal.
Evaluating Smart Sensor Solutions
Traditional wired monitoring systems once meant disruptive installation. Running cables through occupied spaces added complications, time, and unexpected costs. For most buildings, the drawback often outweighed any perceived benefit.
Wireless sensors have since altered the available options. Modern systems, like cirkuit’s water leak sensors, require no major construction or wire routing. Devices can be placed in boiler rooms, kitchens, and tenant areas, connecting via a private LoRaWAN network. Alerts are triggered in real-time if anomalous conditions are detected.
In addition to water, sensors are now available for temperature, humidity, air quality, and occupancy. A broader suite of available options can be seen on cirkuit’s sensor page. Each type of sensor provides additional protection, supporting proactive facilities management.
This technology serves multiple functions, such as: temperature sensors provide advance warning before pipes freeze, humidity monitors catch excess moisture before a mould issue develops, and all integrate with many property management systems that deliver notifications through existing workflows.
Deployment is straightforward. In many properties, full installation can be completed within a day or two, minimizing disruption to occupants and operations. Coverage can be expanded as needed.
How Smart Sensors Influence Commercial Building Insurance Premiums
The most important metric for insurers is claims frequency. Buildings with fewer claims tend to receive more favourable rates. Demonstrated, ongoing risk mitigation can provide further advantages.
IoT sensors help organizations reduce risk, often resulting in reduced costs over time. Early detection helps prevent minor issues from turning into significant losses. Automated alerts enable prompt response and demonstrate to insurers that risk is being managed, not ignored.
The industry is shifting in recognition of this. Seventy per cent of commercial property insurers expect data from smart devices will inform their risk assessments and pricing. Insurers are now requesting relevant sensor data as part of the renewal cycle. Being able to show incidents prevented, rather than just those claimed, can change the renewal discussion significantly.
The net effect: Instead of negotiating based on prior claims alone, buildings can present evidence of improved processes and avoided damages. The result is often better commercial building insurance terms and more flexibility.
A $150,000 Deductible Success Story
A downtown class A office asset, contending with ageing infrastructure and frequent leaks, recognized that commercial building insurance alone wasn’t a sustainable long-term solution. Proactive strategies became a necessity, not an option.
In 2022, the property deployed the cirkuit wireless network, placing leak detection sensors throughout mechanical rooms. The process required no hardwiring, and disruption for tenants was nonexistent. Importantly, the solution integrated with existing property and facilities management platforms.
By 2024, coverage was expanded to include tenant kitchens and washrooms. Over two years, sensor notifications allowed staff to identify and address 124 separate water incidents. In total, more than $2.2 million in potential losses were averted through early intervention.
No insurance claims were submitted throughout this period. This approach was noticed by their insurer, resulting in a $150,000 reduction in deductibles across their real estate portfolio.
The return on investment was realized in under four months. Benefits continue to accrue each renewal cycle, including a stronger negotiating stance, fewer incidents, and controlled insurance costs. For a detailed review, see the full case study available online.
Building a Resilient Future
Insurance expenses are not static. Properties that rely solely on reactionary maintenance remain vulnerable to rising deductibles and premiums.
Widespread adoption of sensors delivers three core advantages: early detection of issues, a demonstrable record of risk mitigation, and negotiation leverage at renewal.
Insurers, such as Zurich, have outlined multi-step water damage prevention programs. This highlights the increasing importance the industry is placing on preventative strategies rather than post-incident response.
Sensor systems are already in use in many Canadian properties. Demonstrating how a proactive approach can help lock in lower commercial building insurance costs and strengthen resiliency long-term.
To explore how wireless monitoring can support your facilities, contact our team and we would be happy to walk you through everything.