Navigating Natural Disasters: Real Estate’s Need for Commercial Insurance

In the world of real estate, there’s a crucial player that often flies under the radar: commercial insurance. While it might not be the most glamorous topic, it’s an absolute must-have, especially when dealing with the unpredictable wrath of Mother Nature – yes, we’re talking about natural disasters.

Imagine this scenario: You’ve invested in a prime commercial property, whether it’s an office space, a retail outlet, or a residential complex. Everything seems smooth sailing until a natural disaster strikes – a hurricane, an earthquake, a flood – you name it. Suddenly, your property is in shambles, and the repair bills are piling up faster than you can say “insurance.”

Let’s talk about commercial insurance for real estate and why it’s an essential safeguard in the event of a natural disaster.

Types of Natural Disasters and Commercial Insurance Coverage

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


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 and 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. 


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. 

To learn more about coverage for events such as wildfires and volcanoes, check out our Guide to Natural Disasters and Commercial Insurance


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. 

Additional Commercial Insurance for Natural Disasters: Beyond the Basics

While general commercial insurance forms the foundation of protection against natural disasters, there are other specialized types of coverage that real estate businesses should consider to ensure comprehensive risk management. These additional insurance policies can provide crucial support in the aftermath of catastrophic events, helping to minimize financial losses and facilitate a smoother recovery process.

Business Interruption Insurance:

Natural disasters can disrupt operations and lead to temporary closures, resulting in income loss. Business interruption insurance provides coverage for lost revenue and ongoing expenses when a property becomes temporarily unusable due to a covered event. This type of insurance can be vital in maintaining financial stability during the recovery phase.

Extra Expense Insurance:

In the wake of a natural disaster, businesses may incur extra costs to expedite repairs or relocate operations. Extra expense insurance covers these additional expenditures incurred to minimize business interruption and resume operations quickly.

Ingress and Egress Insurance:

Access to a property can be blocked due to road closures, debris, or other impediments caused by a natural disaster. Ingress and egress insurance helps cover losses that occur when businesses cannot access their property or customers can’t reach their establishments.

Equipment Breakdown Insurance:

Natural disasters can lead to power outages and equipment malfunctions. Equipment breakdown insurance provides coverage for the repair or replacement of essential machinery and systems, ensuring that businesses can resume operations promptly.

Builder’s Risk Insurance:

Real estate projects under construction are vulnerable to natural disasters. Builder’s risk insurance offers protection for damage or loss to a property under construction, including materials and equipment. This coverage is crucial to safeguard investments during the construction phase.

Debris Removal Insurance:

After a natural disaster, the removal of debris and wreckage can be a significant expense. Debris removal insurance covers the costs associated with cleaning up and clearing debris from a property, helping businesses prepare for the rebuilding process.

Ordinance or Law Insurance:

When rebuilding after a natural disaster, businesses may need to comply with updated building codes and regulations. Ordinance or law insurance covers the additional costs of meeting new building requirements, ensuring compliance and preventing delays.

Loss of Rental Income Insurance:

For real estate investors who lease or rent their properties, loss of rental income insurance provides coverage for lost rental income due to property damage caused by a natural disaster. This coverage helps property owners maintain their cash flow during repairs.

Tenant’s Improvements and Betterments Insurance:

If tenants have made improvements to a property, this insurance covers the cost of repairing or replacing those improvements in the event of damage caused by a natural disaster.

Contingent Business Interruption Insurance:

This coverage extends business interruption protection to instances where a supplier or customer’s property is affected by a natural disaster, disrupting your business’s operations indirectly.

Investing in these additional types of commercial insurance can provide real estate businesses with a comprehensive safety net against the diverse challenges posed by natural disasters. By tailoring insurance coverage to specific risks, businesses can enhance their resilience and protect their assets in the face of unexpected events.

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. 

For more information, contact us today or check out our policies. 

Apex Risk is dedicated to providing clear explanations and guidance that addresses real problems that may arise for your business in your unique industry. Learn who we are and why we do what we do, here.