Although the spring and summer months bring warmer temperatures and increased consumer activity, they also presentunique 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 promptcostly property repairs and business disruptions. What’s more, some spring- and summer-related property losses are excludedfrom coverage under standard commercial property insurance, making businesses susceptible to substantial out-of-pocketcosts. Fortunately, many of these losses can be prevented by identifying seasonal hazards and implementing effectivesafeguards. This article highlights some of the most commonly overlooked commercial property risks during the spring andsummer 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 anyremaining winter snow and ice, as well as increased rainfall. These conditions may contribute to excessive moisture forcommercial properties, potentially causing roof leaks, drainage failures and flooding. This is especially true for businesses thatneglect 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 moreproperty 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 roofingand siding and additional flooding for impacted properties.
When spring-related property damage occurs, it may force businesses to temporarily pause their operations or close theirdoors while they make costly repairs, resulting in lost income. Left unaddressed, water damage stemming from spring weathercan quickly lead to mold and mildew concerns, posing major health hazards for employees and visitors and compounding totalproperty losses. Furthermore, most traditional commercial property insurance policies exclude coverage for flood damage andlosses resulting from poor maintenance, potentially leaving businesses with limited coverage and considerable financial lossesamid such events.
Summer Property Risks
While severe convective storms peak in spring, they often persist into the summer months, thereby posing ongoing wind, hailand flood exposures for commercial properties. The Atlantic hurricane season also runs throughout summer, creating furtherwind and flood hazards for businesses with coastal properties. According to Triple-I, five of the top 10 costliest hurricanes inthe United States have occurred within the past decade, generating hundreds of billions of dollars in property andinfrastructure damage. Additionally, summer is known to produce record-high temperatures and heat waves across thecountry, 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 exteriorfeatures 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 andflooring. 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, businessesmay run into coverage issues following summer-related property losses, particularly as it pertains to flood damage from severeconvective storms or hurricanes and equipment breakdowns or structural issues caused by neglected HVAC systems, roofing orsiding during heat waves. These coverage challenges could result in significant out-of-pocket expenses for affected businessesand 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 maintainample coverage:
- Conduct routine inspections and maintenance. Businesses should keep their properties on documented inspection andmaintenance schedules to help identify and remedy potential issues before they escalate into widespread damage. Thisshould 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 withqualified 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 riskof related damage. This may entail sealing foundation cracks and installing wall anchors or rebars when necessary; utilizingwind-resistant roofing materials; placing storm shutters on all windows and doors; implementing effective landscapingtechniques to improve drainage; removing any trees that could fall on nearby structures; storing essential equipment anddocuments in safe, elevated locations; and addressing various weather events in business continuity and emergencyresponse plans.
- Consider specialized coverage. Businesses should consult trusted insurance professionals to understand their seasonalproperty exposures and secure proper coverage. This may involve purchasing certain policy endorsements and specialtycoverage, 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 needsand 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 theserisks, taking steps to defend against them and maintaining robust insurance portfolios, businesses can approach these monthswith confidence and minimize potential fallout. Contact us today for additional risk management guidance and coveragesolutions.