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Hurricane Insurance Coverage Considerations for Commercial Property Owners

Hurricanes are a complex exposure that can affect multiple aspects of a commercial property. Business owners should assess their coverage.

May 31, 2024

Hurricanes are among the costliest natural weather disasters, with some causing billions of dollars in damage. For businesses in coastal regions, hurricanes are a potentially devastating risk. However, as hurricanes become frequent and severe, some private insurers may not provide coverage to companies located in high-risk areas.

Further complicating matters, hurricanes are a complex exposure that can affect multiple aspects of a commercial property. Organizations may wrongfully assume their insurance protects them from a severe storm. For that reason, business owners should assess their coverage and ensure their commercial property is protected in the event of a hurricane.

Potential Losses

Commercial properties suffer significant losses as a result of hurricanes every year. According to government researchers at the Congressional Budget Office, annual commercial business losses caused by hurricane winds and storm-related flooding cost around $9 billion. In particular, hurricane-related property damage and loss can stem from the following:

  • Wind damage. Hurricane winds can exceed 100 mph and result in extensive property damage.
  • Water damage. Rain and storm surges—tidal waves pushed toward the shore during a storm—can cause property and equipment damage and jeopardize the health and safety of occupants.
  • Business disruptions. A hurricane’s short- and long-term physical and economic impacts can make it difficult for businesses to resume operations.

Research from risk modeling firms suggests hurricanes are increasing in frequency and severity, making it more important than ever for business owners to be prepared for the far-reaching effects of these tropical storms.

Hurricane-Related Coverage

Because hurricanes can cause devastating damage to commercial properties, it’s essential to have adequate insurance coverage before a storm hits. Since hurricanes aren’t generally a named peril in standard commercial property insurance policies, commercial property owners will typically need to purchase supplemental insurance policies to cover hurricane damage, including the following:

  • Flood insurance. Flood insurance covers losses directly caused by flooding and can include building and contents coverage.
  • Windstorm insurance. Windstorm insurance protects policyholders from property damage caused by gales, winds and hail.
  • Sewer backup insurance. Hurricanes can wreak havoc on sewer systems. Sewer backup coverage can protect properties from losses caused by a discharge of water or waterborne material from a sewer, drain or sump.

While most commercial property policies cover debris removal costs, there may be limitations. Commercial property owners should work with a qualified insurance professional to ensure they have coverage for debris removal and pollution cleanup.

More Information

For more information on how to prepare for natural disasters and manage risks, click here.

Commercial property owners shouldn’t assume their policy includes hurricane coverage. Instead, they should work with their insurance partners to ensure that proper coverage is in place to protect their property in the event of a hurricane. For more information, contact us today.

Related Reading: Prepare for Hurricane Season

The above information does not constitute advice. Always contact your insurance broker or trusted advisor for insurance-related questions.