Although the spring and summer months bring warmer temperatures and increased consumer activity, they also present unique risks for businesses. In particular, businesses may be more prone to commercial property losses during these months, primarily due to severe weather, heavy foot traffic and maintenance gaps. In these instances, even minor events can prompt costly property repairs and business disruptions. What’s more, some spring- and summer-related property losses are excluded from coverage under standard commercial property insurance, making businesses susceptible to substantial out-of-pocket costs.
Fortunately, many of these losses can be prevented by identifying seasonal hazards and implementing effective safeguards. This article highlights some of the most commonly overlooked commercial property risks during the spring and summer months and outlines related mitigation strategies.
Spring Property Risks
In many regions of the United States, spring is considered a wet season. This is largely due to rising temperatures melting any remaining winter snow and ice, as well as increased rainfall. These conditions may contribute to excessive moisture for commercial properties, potentially causing roof leaks, drainage failures and flooding. This is especially true for businesses that neglect to keep their properties on routine maintenance schedules. Clogged gutters, missing or warped roof shingles, foundation cracks and poor landscaping can make it increasingly difficult to defend against water damage and related losses.
Complicating matters, spring is also peak season for severe convective storms (e.g., thunderstorms, lightning, flash flooding, heavy winds, hail and tornadoes). These storms affect nearly every part of the country and have repeatedly caused more property damage and associated losses than any other peril in recent years, according to the Insurance Information Institute (Triple-I). Depending on their intensity, these storms can lead to serious structural failures, power outages, damaged roofing and siding and additional flooding for impacted properties.
When spring-related property damage occurs, it may force businesses to temporarily pause their operations or close their doors while they make costly repairs, resulting in lost income. Left unaddressed, water damage stemming from spring weather can quickly lead to mold and mildew concerns, posing major health hazards for employees and visitors and compounding total property losses. Furthermore, most traditional commercial property insurance policies exclude coverage for flood damage and losses resulting from poor maintenance, potentially leaving businesses with limited coverage and considerable financial losses amid such events.
Summer Property Risks
While severe convective storms peak in spring, they often persist into the summer months, thereby posing ongoing wind, hail and flood exposures for commercial properties. The Atlantic hurricane season also runs throughout summer, creating further wind and flood hazards for businesses with coastal properties. According to Triple-I, five of the top 10 costliest hurricanes in the United States have occurred within the past decade, generating hundreds of billions of dollars in property and infrastructure damage.
Additionally, summer is known to produce record-high temperatures and heat waves across the country, placing immense strain on properties’ heating, ventilation and air conditioning (HVAC) systems and, in extreme cases, warping roofing and siding. Businesses that neglect to regularly inspect and maintain their HVAC systems and the exterior features of their properties could sustain the most damage from such heat, potentially leading to equipment breakdowns, structural failures and operational disruptions.
In some industries, namely hospitality and retail, the summer months also bring increased consumer activity and foot traffic. While beneficial for business revenue, such activity can also contribute to additional wear and tear on doors, stairways and flooring. It may even leave properties more vulnerable to security issues, including theft and vandalism. In these instances, businesses could experience more frequent property damage and related losses.
Similar to the previous season, businesses may run into coverage issues following summer-related property losses, particularly as it pertains to flood damage from severe convective storms or hurricanes and equipment breakdowns or structural issues caused by neglected HVAC systems, roofing or siding during heat waves. These coverage challenges could result in significant out-of-pocket expenses for affected businesses and threaten their overall financial stability.
Mitigation Strategies
There are several steps businesses can take to help reduce commercial property losses in spring and summer and maintain ample coverage:
-
- Conduct routine inspections and maintenance. Businesses should keep their properties on documented inspection and maintenance schedules to help identify and remedy potential issues before they escalate into widespread damage. This should include both internal and external property features, such as doors, windows, stairways, flooring, HVAC systems, electrical equipment, roofing, drains, gutters, flashing and siding. It’s best for businesses to build strong relationships with qualified contractors to ensure swift repairs when property issues arise.
- Enhance weather preparedness measures. In addition to performing regular property inspections and maintenance, businesses should carefully review their specific weather exposures and develop preparedness measures to reduce the risk of related damage. This may entail sealing foundation cracks and installing wall anchors or rebars when necessary; utilizing wind-resistant roofing materials; placing storm shutters on all windows and doors; implementing effective landscaping techniques to improve drainage; removing any trees that could fall on nearby structures; storing essential equipment and documents in safe, elevated locations; and addressing various weather events in business continuity and emergency response plans.
- Consider specialized coverage. Businesses should consult trusted insurance professionals to understand their seasonal property exposures and secure proper coverage. This may involve purchasing certain policy endorsements and specialty coverage, such as flood insurance. For larger businesses with greater exposures, alternative risk transfer solutions (e.g., parametric coverage and captives) may also be worth evaluating. Businesses should regularly assess their coverage needs and make adjustments as needed to reflect evolving exposures.
Conclusion
Spring and summer bring a host of commercial property exposures for businesses to consider. By better understanding these risks, taking steps to defend against them and maintaining robust insurance portfolios, businesses can approach these months with confidence and minimize potential fallout.
Contact us today for additional risk management guidance and coverage solutions.
Article Published By: Zywave, Inc.
