Tariffs, Stockpiles, and Your Stock Limit: An Insurance Check-Up for Ontario Manufacturers and Wholesalers

Your warehouse is fuller than it has ever been, your steel costs more than it did last spring, and your second supplier is now in Monterrey instead of Michigan. Your insurance policy, meanwhile, still describes the business you ran in 2024.

That gap is easy to miss and expensive to discover. The tariff fight has changed what you store, what it costs to replace, and how long you'd be down after a loss. If your property limits, stock values, and business interruption terms haven't moved with it, a claim is where you'll find out. The fix is mostly paperwork, and the timing for it is good.

What the trade war has done to your insurance exposure

The short version of 2026: trade talks between Canada and the U.S. collapsed in August, and the tariffs went up on both sides. According to CFIB's trade war tracker, the U.S. applies an additional 50% tariff to a broad range of Canadian goods effective August 22, 2026, and Canadian counter-tariffs of 15% to 50% apply to more than 700 U.S. items as of September 8 (CFIB). The lists keep changing, so check the current tracker before relying on any one item.

For a manufacturer or wholesaler, that shows up in insurance in three places.

Replacement cost. If your inputs, machinery, or finished goods now cost more to replace, the values on your policy may be too low. Insurance Business Canada flagged exactly this after Canada's August retaliation: brokers need to check whether declared values still reflect the replacement cost of equipment, inventory, and materials (Insurance Business Canada, Aug. 25, 2026).

Inventory levels. Many plants have moved away from just-in-time and are holding more stock on site, particularly metals, corrugated packaging, and plastics, according to a Liberty Mutual Canada underwriting manager interviewed in June (Insurance Business Canada, June 1, 2026).

Time to recover. New suppliers and longer lead times mean a fire or flood could keep you down longer than it would have two years ago.

Even if the tariffs ease, those changes don't automatically reverse. Sourcing, supplier, and inventory decisions made during the dispute have, in many cases, permanently changed a company's exposure (Insurance Business Canada, Aug. 20, 2026).

Stock limits and the coinsurance clause: where the money goes missing

Most commercial property policies carry a coinsurance clause. In plain terms, you agree to insure your property for at least a set percentage of its actual value, commonly 80% or 90%. If you carry less than that at the time of a loss, the insurer reduces the payment in proportion to the shortfall, even on a partial loss.

A hypothetical example: a wholesaler carries a $2 million stock limit with a 90% coinsurance clause. After stockpiling, the warehouse actually holds $3 million of stock. The policy requires at least $2.7 million (90% of $3 million). A fire destroys $500,000 of inventory. Because the business carried $2 million against a $2.7 million requirement, the insurer pays roughly 74% of the loss, about $370,000 before the deductible. The other $130,000 comes out of the owner's pocket, on a loss well inside the limit.

Ways to avoid that:

Raise the stock limit to reflect your real peak, not your average.

Ask about a stated amount or agreed value clause, which suspends coinsurance for the policy term if you provide a signed statement of values.

Use a peak season endorsement if your stock spikes predictably, such as ahead of a tariff deadline or Q4.

Consider a stock reporting form if inventory swings a lot: you report values monthly or quarterly and pay premium on what you actually hold.

Your commercial property policy should also be clear on where stock is covered. If you're renting overflow space or leaving goods at a third-party warehouse, confirm off-premises and stock-in-transit coverage. Goods on a truck often belong on a cargo policy, not the building policy.

Business interruption: the indemnity period is now the weak spot

Business interruption insurance replaces lost profit and continuing expenses while you rebuild. The limit gets the attention, but the indemnity period, the length of time the insurer will pay, is where tariff-era policies are falling short.

Ask yourself how long it would take to get back to full production after a serious fire today. Count the time to source replacement machinery (which may now come from a new supplier, overseas), get permits, rebuild, and win back customers who moved to a competitor while you were down. If the honest answer is longer than your indemnity period, often 12 months on smaller policies, you're underinsured on time even if the dollar limit looks fine. The August Insurance Business piece makes the same point: longer material lead times can stretch the restoration period, so indemnity periods deserve a fresh look.

Also check:

Extended period of indemnity, which keeps paying for a set time after you reopen while sales recover.

Contingent business interruption, which covers lost income when a key supplier or customer has a loss, not you. Insurers are paying more attention to this as manufacturers review their dependence on single suppliers, per the Liberty Mutual underwriter.

Utility service interruption, for power or gas outages that originate off your premises.

For a primer on how BI claims are calculated, see our earlier post, Business Interruption Insurance: The Coverage That Saves the Year After the Fire.

Machinery: equipment breakdown and replacement cost

Two separate questions here. First, is your machinery insured for what it would cost to replace today, including freight, duties, and installation? If a replacement press now carries a tariff, that's part of the replacement cost.

Second, does your property policy actually cover a mechanical or electrical breakdown? Usually it doesn't, which is why equipment breakdown coverage exists. It can include spoilage of stock and the lost income while the machine is out, which matters more when replacement parts are on a longer lead time.

New suppliers, new liability

Switching suppliers changes your liability picture too.

Importing changes your role. If you now buy components or finished goods from an overseas maker, your business may be the first Canadian company in the chain, and the obvious defendant if a product causes injury or damage here. Tell your insurer, and check that your product liability coverage and limits reflect imported goods.

Contracts matter. Weak indemnity and insurance wording in supplier and vendor contracts can push losses back onto the manufacturer. Ask new suppliers for certificates of insurance, check the limits, and make sure the contract spells out who's responsible for what.

Outside haulers. More manufacturers are using third-party carriers. The Liberty Mutual underwriter's advice: vet carriers' driver standards, safety records, and insurance, because an underinsured hauler can push a loss back to you through non-owned auto exposure.

Recall planning. A new supplier is a new source of defects. If you haven't written a recall plan, start with our recall playbook.

Why now is a good time to fix it

There's some good news here: commercial property pricing in Canada is still soft. Marsh's Q3 2026 index put Canadian property rates down 8%, the steepest decline of any major line (Insurance Business Canada, Oct. 21, 2026). That makes it cheaper to raise limits now than in a firmer market.

The softness may not last. MSA Research data presented at an IBC event in April showed Canadian commercial property premiums slipped slightly in 2025 while non-residential construction investment rose 2.6% (Canadian Underwriter). When premiums lag exposures like that, insurers eventually tighten up, often by pushing harder on insured values at renewal. Fixing values before the insurer asks puts you in a better position.

Your manufacturing insurance check-up: 10 items

Bring this list to your next broker meeting, or work through it before renewal:

1. Current replacement cost of buildings, machinery, and equipment, including freight, duties, and installation.

2. Peak inventory value over the last 12 months, by location.

3. Coinsurance percentage on your policy, and whether a stated amount clause is available.

4. Stock stored off-site: rented space, third-party warehouses, consignment, in transit.

5. Business interruption limit, form, and indemnity period, tested against a realistic rebuild timeline.

6. Key suppliers and customers whose loss would shut you down (for contingent BI).

7. New import sources and whether your product liability insurer knows about them.

8. Supplier, vendor, and hauler contracts: indemnities, insurance requirements, certificates on file.

9. Equipment breakdown coverage, including spoilage and BI.

10. Your deductibles, and whether a higher one makes sense given your cash position.

Keeping the premium in check

Higher values mean a higher premium, but there are ways to offset it.

Bundle property, liability, BI, and equipment breakdown with one insurer. A full package usually prices better than separate policies, and you avoid gaps between them. See bundle and save.

Show your loss control: sprinklers, fire separation, housekeeping, hot work permits, and stock storage height and spacing all matter to property underwriters.

Choose deductibles deliberately. Taking a larger deductible can free up premium to buy a longer BI indemnity period, which is often the better trade.

Report accurate values. Underwriters price uncertainty. A clean, current statement of values often gets better terms than a stale one.

Shop the package. Appetite for manufacturing and wholesale risks varies by insurer and by what you make. A broker who can compare several markets can find the one that wants your class. See our manufacturing and wholesaling insurance page.

The bottom line

The trade war has changed what Canadian manufacturers and wholesalers store, what it costs to replace, and how long it would take to recover from a loss. If your insurance still reflects your 2024 business, a claim could leave you paying part of it yourself, through a coinsurance penalty or an indemnity period that runs out too soon.

With property pricing still soft, now is a good time to update values and tighten your package. If you'd like a second set of eyes on your stock limits, BI terms, or supplier contracts, get a quote from Insurabiz. We compare 17 Canadian insurers for manufacturers and wholesalers across Ontario and eight other provinces.

This article is general information only and not legal or insurance advice. Coverage depends on your policy wording and the insurer. Speak with a licensed broker about your situation.