The current weakness of the Canadian dollar has once again made our currency unsuitable for Canadian companies operating in and exporting their goods to the U.S. Product sales to the U.S. in particular are associated with an elevated exposure to catastrophic losses, so it is important that brokers recommend adequate insurance limits. The Bank of Canada, which has no specific target value for the Canadian dollar and has not intervened in foreign exchange markets since 1998, maintains that market conditions should determine the worth of the Canadian dollar.
Since hitting a high of US$1.1039 on November 7, 2008, the Canadian dollar has declined steadily and has slowly crept back to reality, trading in the 80-cent range compared to the U.S. dollar. As commodity prices decline and the economy struggles along in a recession, the loonie has been hit hard.
Most commercial liability and auto fleet policies are written for limits of Cdn$2 million or less, which is totally inadequate for Canadian companies operating within Canada, let alone those with U.S. exposures. Even in a full-blown hard market, the incremental cost to raise policy limits to $10 million or $20 million remains affordable.
The figures below clearly illustrate that a dollar isn't necessarily a dollar.
| Canadian limit | U.S. Equivalent | Shortfall |
| $ 1,000,000 | $ 792,400 | $ 207,600 |
| $ 2,000,000 | $ 1,584,800 | $ 415,200 |
| $ 5,000,000 | $ 3,962,000 | $ 1,038,000 |
| $ 10,000,000 | $ 7,924,000 | $ 2,076,000 |
| $ 20,000,000 | $ 15,848,000 | $ 4,152,000 |
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