Proactive Risk Management and the Right Insurance Coverage
by National Real Estate Insurance Group
The United States has around 15 diverse climates with cities spread across nearly 2.3 billion acres of land. Keeping up with changing weather conditions and preparing properties for severe summer weather in each region can be challenging for investors.
As weather events become more frequent and unpredictable, proactive risk management and insurance are essential to protecting investment properties. The following seasonal risks represent some of the costliest weather-related threats to real estate investment properties across the United States.
Wind, Hail, and Tornadoes
High winds, hail, and tornadoes can occur in nearly any region of the United States, though the Midwest and Southeast face elevated risk due to seasonal storm activity and weather patterns. These three perils can cause roof damage, broken windows, or damage to detached structures like garages or sheds.
Wind & Hail insurance coverage primarily covers property damage caused by strong winds, tornadoes, and hailstorms. While most standard dwelling policies include this coverage, Wind & Hail often carries a separate deductible — typically represented as a percentage of the insured value, which may vary based on the property’s risk tier or distance from the coast.
In some high-risk Midwest regions and many coastal locations, Wind & Hail coverage may be excluded from the property policy, requiring investors to purchase a specialized policy or endorsement to ensure protection against these perils.
Be aware: some policies may exclude coverage for cosmetic hail damage to roofs and siding, which means any damage affecting only the appearance (not the functionality) would not be covered.
To protect your investment properties and mitigate risk, secure loose gutters and downspouts; remove dead or dying trees from the property, cover all windows, install storm shutters, and brace garage doors; and utilize tarps to help keep rain from entering the property and causing additional damage after the initial event.
Hurricanes/Named Storms
The Atlantic hurricane season runs from June through November, with peak activity occurring between mid-August and late October. The Eastern Pacific hurricane season runs from mid-May through November, with peak activity occurring between July through September.
Once a storm has been designated and given a name by the National Weather Service, standard Wind & Hail coverage no longer applies to resulting losses. For damage caused by a named tropical storm or hurricane to be covered, the dwelling policy must include Named Storm coverage.
A Named Storm endorsement covers property damage caused by the wind and rain from a Named Storm event. For example, if the event caused a storm-related opening, allowing rainwater to enter the home and damage the interior of the property, the damage from the rainwater would likely be a covered cause of loss. A storm-related opening may include roofing shingles lifted by heavy winds or hail breaking a window and allowing rain to enter the home.
Water that leaks or seeps into the home because of a deteriorated roof or windows damaged by something other than a named storm is not covered under this product.
Some best practices to mitigate risks include trimming or removing dead trees and limbs; securing loose gutters and downspouts and clearing any clogged areas or debris; and retrofitting to secure and reinforce the roof, windows, and all doors.
Flooding
A flood is defined as water or mudflow inundating two or more acres of normally dry land or two or more properties, usually caused by overflowing bodies of water or excessive rainfall causing water to seep through foundation walls. To be considered a flood loss, the water must come from an external source, not from within your plumbing or sewer system.
Any area of the United States can be overwhelmed by flash flooding, but some regions are more susceptible than others. FEMA (Federal Emergency Management Agency) maintains flood zone maps that classify areas based on their level of flood risk.
Even properties that aren’t located in high-risk flood zones are still exposed to potential losses. In fact, 20-25% of annual flood losses in the U.S. occur outside of a high-risk zone. Even in a moderate-risk zone, properties are more than 25% likely to flood over the course of a 30-year mortgage.
Flood is nearly always excluded from a dwelling policy and requires investors to purchase a separate policy or endorsement for coverage to apply. A typical Flood policy will have a set building coverage limit (commonly $250,000) and cover HVAC, plumbing, appliances, carpet, foundation walls, and more.
Preventable mold or mildew damage, additional living expenses or loss of use, cars or vehicles, and basement contents are almost always excluded on a Flood policy.
An average flood loss can cost property owners nearly $40,000 out of pocket, so we strongly encourage investors to consider Flood Insurance for every property, regardless of location.
It is important to note that Named Windstorm and Earthquake coverage will not cover losses from resulting storm surge flooding. For coverage to extend to these losses, a separate Flood policy must be purchased.
Some best practices to mitigate risks include checking the grading of soil around your foundation to ensure water will flow away from the house when it rains; installing additional drainage if necessary or regrading problem areas; making sure gutters and downspouts are clear of blockages to help shed water away from the home; testing the sump pump to ensure it will come on when water flows into the sump pit; and stacking sandbags around the perimeter of the house and in front of entryways to prevent rising water from entering the property.
Mitigate Risk with NREIG
No property is entirely immune to seasonal weather risk, but the right insurance coverage and proactive mitigation strategies can significantly reduce both the likelihood and financial impact of losses.
As specialists in real estate investment property insurance, National Real Estate Insurance Group works with investors to identify coverage gaps, navigate complex regional risks, and secure customized insurance solutions designed specifically for rental property portfolios.
Visit nreig.com/REIINK to learn more about how NREIG can help protect your investment properties year-round.
