ALERT

Severe thunderstorms continue to generate losses once associated primarily with hurricanes and other large-scale catastrophes.

Munich Re estimates that severe thunderstorms caused approximately $56 billion in total losses in the United States during 2025, including $42 billion in insured losses. Those figures were well above the corresponding 10-year averages of $39 billion in total losses and $29 billion in insured losses.

Although estimates vary by source and methodology, the broader trend is clear. Tornadoes, hail, straight-line winds, and intense rainfall have become persistent sources of major property and business interruption losses.

Early 2026 losses are still developing, and a reliable industry-wide estimate of U.S. severe convective storm losses for the year to date is not yet available. That does not indicate that the underlying exposure has declined. Severe convective storm losses can accumulate quickly, and a limited number of major tornado, hail, or wind outbreaks can materially change annual results.

For businesses and commercial property owners, these losses reflect an important shift in catastrophe exposure. Severe convective storms typically affect smaller geographic areas than hurricanes, but they occur frequently, develop quickly, and can cause extensive damage to buildings, roofs, equipment, vehicles, inventory, utility systems, and property stored outdoors. A series of localized storms can collectively generate losses comparable to those associated with a major named catastrophe.

The consequences may extend beyond the cost of repairing physical damage. A severe storm can interrupt operations, restrict access to a facility, disrupt utilities, delay construction, damage critical equipment, displace tenants, and create contractual or supply-chain complications.

Understanding the Exposure

A severe convective storm is a thunderstorm capable of producing one or more significant hazards, including tornadoes, large hail, damaging straight-line winds, lightning, and intense rainfall.

These storms can develop with limited warning and affect businesses far from traditional coastal catastrophe zones. Organizations should consider both the immediate property damage and the operational disruption that may follow.

Tornadoes

Preliminary data from the National Oceanic and Atmospheric Administration showed that 1,559 tornadoes were reported in the United States during 2025. That was 127% of the 1991–2020 annual average and represented the fifth-highest preliminary annual count on record.

Even a relatively narrow tornado path can cause catastrophic damage to commercial buildings and surrounding property. Roof failure, exterior wall damage, broken glazing, collapsed overhead doors, falling trees, flying debris, and extended utility outages can significantly increase the cost and complexity of a loss.

Damage may also affect building systems, production equipment, inventory, tenant improvements, telecommunications infrastructure, and security systems. When a facility becomes partially or completely unusable, the resulting business interruption loss may exceed the cost of repairing the building itself.

Hail

Hail remains one of the most persistent sources of property damage associated with severe thunderstorms. It can damage roofing systems, siding, skylights, windows, rooftop equipment, solar panels, vehicle fleets, outdoor inventory, and heating and cooling systems.

Commercial roof damage may not be visible from the ground. Punctured membranes, damaged flashing, separated seams, and impaired drainage systems can allow water to enter during later storms. A loss that initially appears minor can become significantly more expensive once moisture reaches insulation, electrical systems, machinery, ceilings, or finished interior spaces.
Businesses with large vehicle fleets, automobile inventories, mobile equipment, or outdoor storage may also face substantial hail losses from a single storm.

Straight-Line Winds

Straight-line winds can exceed hurricane-force speeds even when no tornado is present. They can damage roof coverings, rooftop equipment, canopies, loading docks, temporary structures, signs, fencing, exterior walls, and overhead doors.

When an exterior opening fails, wind can enter the building, increasing pressure on the roof and surrounding walls. Damage may then spread rapidly beyond the initial point of failure.

Construction sites and properties with outdoor storage face additional risks. Unsecured materials, temporary fencing, scaffolding, equipment, containers, signs, and debris can become airborne, damaging property or injuring employees, contractors, customers, or members of the public.

Heavy Rain and Water Intrusion

Severe thunderstorms may produce intense rainfall within a short period. Water can enter through damaged roofs, windows, doors, vents, loading areas, and poorly sealed exterior openings. It may also overwhelm drainage systems, collect on low-slope roofs, or accumulate around foundations and below-grade areas.

Water intrusion can damage inventory, records, telecommunications equipment, electrical systems, machinery, tenant property, and interior finishes. Even a limited amount of water may require specialized remediation or force an organization to suspend operations in the affected area.

Flooding caused by rising or accumulating surface water is generally excluded under standard commercial property policies. Depending on the property’s location and insurance program, separate flood coverage may be necessary.

Severe Storms Accounted for Most Billion-Dollar Disasters in 2025

Climate Central identified 23 U.S. weather and climate disasters that caused at least $1 billion in damage during 2025. Twenty-one were severe storm events, including tornadoes, hail, and damaging-wind outbreaks.

The concentration of billion-dollar events shows that catastrophe exposure is not limited to hurricanes, wildfires, and earthquakes. Repeated thunderstorm losses can influence property insurance pricing, deductibles, underwriting requirements, available capacity, and the cost of repairing or replacing damaged property.

Storm activity is only part of the equation. Higher construction costs, increased property values, continued development in storm-prone areas, aging infrastructure, larger building footprints, more sophisticated building systems, and increasingly expensive equipment can all increase the severity of a loss.

Six Ways Organizations Can Reduce Severe Storm Losses

Organizations cannot prevent severe weather, but they can take practical steps to reduce physical damage and limit operational disruption.
Research from the U.S. Chamber of Commerce, Allstate, and the U.S. Chamber of Commerce Foundation has found that investments in disaster resilience and preparedness can significantly reduce damage, cleanup costs, and broader economic disruption.

The following measures can improve a facility’s ability to withstand wind, hail, and heavy rain.

Inspect and Maintain Roofing Systems

The roof is one of a commercial building’s most important defenses against severe weather.

Commercial roofs should be inspected periodically, following significant storms, and before the location’s primary storm season. Repairs should address damaged membranes, loose flashing, deteriorated sealants, clogged drains, compromised penetrations, displaced materials, and signs of previous water intrusion.

When planning a roof replacement or major renovation, organizations should discuss impact-resistant materials, enhanced fastening systems, sealed roof decks, improved roof-to-wall connections, drainage capacity, and recognized resilient-construction standards with qualified contractors and engineers.

Rooftop equipment also requires attention. HVAC units, vents, solar panels, antennas, and other components should be inspected, properly secured, and maintained.

Protect Exterior Openings

Overhead doors, loading-dock doors, windows, storefront glazing, and exterior doors are vulnerable to wind pressure and flying debris.

Tracks, hinges, mounting hardware, latches, seals, and reinforcement systems should be inspected regularly. Damaged components and doors that are not adequately rated for local wind conditions should be repaired or replaced.

Depending on the property, organizations may also consider impact-resistant glazing, storm shutters, reinforced doors, and other protective systems. Warehouses, manufacturing facilities, automotive operations, and buildings with large overhead doors may require particular attention.

Address Drainage and Water-Intrusion Risks

Inspect the building exterior for deteriorated caulking, cracks, loose cladding, damaged vents, and gaps around utility penetrations. Repair areas that could allow wind-driven rain to enter.

Roof drains, gutters, downspouts, scuppers, catch basins, and site drainage systems should be kept clear and maintained. Organizations should also assess whether these systems can handle intense rainfall and whether water is likely to collect near loading areas, entrances, foundations, or below-grade spaces.

Critical equipment, inventory, records, and materials should not be stored directly on the floor in areas vulnerable to water intrusion. Where practical, move them to a less exposed area or elevate them above anticipated water levels.

Maintain Trees and Outdoor Property

Remove dead, diseased, or unstable trees and trim branches that could strike buildings, vehicles, utility lines, equipment, or neighboring property. Work involving large limbs or electrical lines should be performed by qualified professionals.

Exterior signs, awnings, fencing, canopies, light poles, storage racks, and similar structures should also be inspected for deterioration or inadequate anchoring.

Loose gravel, pallets, construction materials, containers, and other outdoor property can become airborne during high winds. These hazards should be identified and addressed before severe weather arrives.

Establish Procedures for Equipment, Fleets, and Temporary Operations

Organizations should have written procedures for securing or relocating outdoor equipment, vehicles, mobile machinery, inventory, and temporary structures when severe weather is forecast.

Construction firms should address cranes, scaffolding, temporary fencing, portable toilets, jobsite trailers, partially completed structures, and stored building materials in their severe-weather plans.

Businesses with vehicle fleets or outdoor inventory should identify covered or protected parking options where available. Responsibilities should be assigned in advance, so employees are not left to improvise after a storm warning has been issued.

Maintain Accurate Property and Business Interruption Information

Maintain current building valuations, equipment schedules, inventory records, photographs, invoices, serial numbers, and replacement-cost estimates. Copies should be stored electronically or at another secure location away from the insured property.

Property values should reflect current labor, material, equipment, and construction costs. Outdated values can result in inadequate limits, coinsurance penalties, or an insufficient recovery after a major loss.

Business interruption values and recovery assumptions should also be reviewed. Consider how long it could take to repair or rebuild the property, replace specialized equipment, secure permits, restore utilities, and return to normal operations.

Review Insurance Before the Storm

Physical loss controls are only one part of severe-weather preparation. Organizations should also understand how their insurance program may respond.
Commercial property policies commonly provide coverage for direct physical loss caused by wind and hail, subject to applicable terms, exclusions, conditions, limits, sublimits, deductibles, and valuation provisions. Flooding, deterioration, deferred maintenance, wear and tear, and certain forms of water intrusion may not be covered.

Key areas to review include:

Building, business personal property, and equipment limits
Replacement-cost and actual-cash-value provisions
Coinsurance and agreed-value provisions
Ordinance or law coverage
Business income and extra expense coverage
Period-of-restoration assumptions
Utility services coverage
Contingent business interruption coverage
Debris removal and pollutant cleanup limits
Sublimits for outdoor property, signs, landscaping, and fencing
Flood and surface-water exclusions
Windstorm, hurricane, named-storm, and hail deductibles
Roof-payment schedules and cosmetic-damage limitations
Protective-safeguard requirements
Loss reporting, inspection, and documentation requirements

Percentage-based wind or hail deductibles can create substantial retained exposure. A 2% deductible on a building insured for $10 million, for example, could leave the insured responsible for the first $200,000 of a covered loss.

Roof provisions also require careful review. Depending on the insurer, roof age, roofing material, location, and policy form, roof damage may be adjusted at replacement cost, actual cash value, or under a roof-payment schedule.

Organizations with multiple locations should determine whether deductibles apply on a per-location, per-building, per-occurrence, or another basis. The deductible structure can significantly affect the outcome when one storm system damages several insured properties.

Business income limits and restoration periods should reflect realistic recovery conditions. Specialized equipment, contractor availability, permitting delays, supply chain constraints, utility restoration, and building code requirements can all extend the time required to resume operations.

Preparing for a Persistent Catastrophe Exposure

Severe convective storms are no longer a secondary concern for catastrophe. The scale of recent losses shows how significantly tornadoes, hail, straight-line winds, and severe thunderstorms can affect commercial property owners, contractors, manufacturers, real estate organizations, vehicle fleets, and other businesses.

Preparing for this exposure requires more than responding to the next weather alert. Organizations should evaluate building resilience, maintenance practices, emergency procedures, property valuations, business interruption exposures, insurance limits, deductibles, exclusions, and coverage restrictions before a loss occurs.

Contact SterlingRisk to review your property and casualty insurance program, identify potential gaps, and determine whether your current limits, deductibles, and coverage structure remain appropriate for a changing severe-weather environment.

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DISCLAIMER: This article is provided by SterlingRisk Insurance for general informational purposes only and should not be construed as legal or insurance advice. Always review your individual policy terms and consult your broker or legal counsel regarding your specific situation.