Business repairing property from a natural disaster with commercial insurance

Natural Disasters and Commercial Insurance

In 2020 and 2021, U.S. insurers paid $176 billion for natural catastrophe insurance claims alone. This was the highest total in a two-year period for commercial insurance claims relating to natural disasters. In 2021, 20 separate billion-dollar weather-related events occurred in the United States, destroying buildings, businesses, and lives. 

Business owners cant’ control if a natural disaster will affect their business. However, they can control how their business will recover in the event of a natural disaster. 

Business owners can take steps to prepare for the event of a natural disaster by purchasing the right insurance.

Why Do You Need Natural Disaster Coverage in Your Commercial Insurance?

According to a report from FEMA, 40-60% of small businesses don’t recover from a natural disaster. 

Business owners need commercial insurance with natural disaster coverage to cover the damage and losses caused by the event and support a strong and successful recovery. Business owners should also consider additions, such as business interruption insurance, to help to cover the loss of income during or following an event.

Standard Commercial Insurance Coverage vs. Additional Policies

Insurers may require coverage for some natural disasters – such as flooding, earthquakes, and volcanic eruptions –  to be separate policies. If your business is located in an area prone to these events, be sure to note if they are covered in your commercial insurance plan or if you need to purchase a separate policy. 

Let’s discuss the types of natural disasters and the coverage commercial insurance policies typically offer for each event.

Types of Natural Disasters and Commerical Insurance Coverage

Coverage can vary depending on both the type of natural disaster and the area in which the business is located. 


Most standard commercial insurance policies cover losses resulting from wind, such as a roof being damaged or torn off, broken windows, and exterior damage. Additionally, policies should cover water damage resulting from rain leaking into the building. 

However, flood insurance is a separate policy. If a business is located in an area vulnerable to floods, owners will need to invest in flood insurance to protect their business against losses. 


According to the National Oceanic and Atmospheric Administration, more than a thousand tornadoes hit the United States each year. 

Similar to hurricane coverage, commercial insurance typically covers wind damage as well as can reimburse owners for damage caused by rain and hail. 


Owners tend to underestimate the risk of floods, but 90% of natural disasters include some form of flooding and, as we’ve discussed, most insurance companies require flooding to be a separate policy. We highly recommend considering investing in a separate flood policy to protect your business. 


Fire insurance is typically sold as a component of commercial insurance and helps to protect against losses caused by fire, lightning, and the removal of property from areas endangered by fire. 


Earthquake coverage is also sold as a separate policy from commercial insurance but can help protect businesses against a variety of earthquake-induced effects, such as collapsed gas lines, crumbling or cracking walls, as well as damage to the interior and exterior of buildings. Insurers vary in the type of coverage they provide for earthquakes, so owners should clarify what exact damage is protected in their policy. 


Volcano eruptions are rare but commercial insurance policies generally offer coverage for damage caused by an eruption, shockwaves, or ash. However, some insurers may not offer coverage in lava flow hazard zones, which are areas prone to volcanic activity.

Additionally, owners should note that commercial insurance doesn’t cover cars or other vehicles; they will need to purchase other forms of insurance, such as auto insurance, to protect these entities as well.

Let’s Talk About Business Income Insurance

That’s right–we’re talking about the type of coverage every business owner wished they’d had during the COVID-19 pandemic. 

Business income insurance –also known as business interruption insurance– can supplement income lost as a result of closing because of a natural disaster or event. For example, if the wind blows a tree through the front window of your business and you are forced to close for a week while the damage is repaired, business interruption insurance can help to cover the loss of income your business would have made during that week.  

Ready to Find the Right Insurance for Your Business? 

At Apex Commercial Insurance Services, we focus on giving small to mid-market businesses the attention they deserve. 

Insurance can protect you not only from unseen disasters but from occurrences you already know are a danger. We take a proactive, strategic approach to risk management so you can do what you do well – run your business. Contact us here.

Learn more about us and why we do what we do, here.