Seasonal Risk Management

June 3, 2024 | By: Brock Evans, Matthew L. Grange, John Barnard

Weather Considerations for Building Owners and Property Managers

When it comes to seasonal risk management in the context of commercial property, convective storms are the most common exposure that must be frequently addressed. Storm preparedness should be an ongoing conversation that is regularly revisited, especially as you bring on new team members. The dialogue and action steps should include both proactive planning as well as specific instructions on how to react during a storm.

Even with advances in weather forecasting, it is imperative to be prepared in advance for anomalous situations that can pop up with minimal warning. As an example, peak tornado season traditionally falls between March and June. However, in 2024 there have been over 150 tornadoes recorded in the first 3 months of the year. Thus, it is crucial for building engineers and property management to be prepared for the unexpected.

A comprehensive storm preparedness plan should include maintaining mechanical and electrical equipment, retaining a proper supply of sandbags and other water detention items, performing routine tune-ups on emergency power generators, stocking ample batteries for essential electronic devices like flashlights, regularly replenishing emergency kits, establishing a communication system to keep employees and tenants informed during an emergency, working with security and parking vendors to address ingress/egress during an emergency, and performing preventative maintenance.

To that end, it should be noted that property insurance policies will typically only respond to damage from “sudden and accidental” causes of loss and not from ongoing issues resulting from negligence. Hence, the need for a comprehensive property inspection and preventative maintenance program. This could include any of the following actionable items, depending on the scope of the property:

  • Roof, gutter, and drain inspection and maintenance
  • Installation of water intrusion alarms
  • Electrical safety / thermographic inspections
  • Lightning protection system inspection
  • Routine readiness testing of emergency systems such as back-up generators, fire pumps, fire alarms, sprinklers, fire hydrants, etc.

Deferred Maintenance

The high cost of construction materials and lack of labor availability has led to an increase in deferred maintenance. However, insurance underwriters often take a negative view of this practice because it can lead to a decline in the overall condition of the property and result in more extensive and costly repairs in the future. As a result, underwriters are becoming more critical of maintenance plans and procedures, underscoring the importance of timely maintenance schedules. Investments and improvements not only add value, but also improve the risk tolerance, impacting deductibles, limits and available markets.

Restoration Contractors

In addition to preparing building staff and vendors internally, we recommend that our clients establish arrangements before disaster strikes with vetted water damage restoration contractors. Typically these types of vendors can provide Master Service Agreements (MSA’s) outlining the terms, conditions, and pricing in order to provide clear directions and procedures for when an emergency does arise. Many times these MSA’s will establish priority status and dictate response times, so it is prudent to have at least one restoration partnership in place at all times.

Other weather-related concerns include heat exposure due to sporadic heat waves, power outages from extreme heat, and wildfires as seen recently in California and Texas. Wildfire scores have become a primary underwriting criterion in western states. Insurers are starting to exclude coverage or decline accounts based on these scores.

Risk Management for Contractors

Builders and contractors lose millions of dollars annually due to the lack of a Storm Preparedness Plan. This is the primary reason why many insurance companies are now asking for these plans during the storm season and prior to issuing coverage. There are many steps that can be taken by general and artisan contractors alike in preparation for a storm. These actionable items may include:

  • Dismounting all scaffolding and secure properly
  • Protecting underground piping and underground drains to prevent any accumulation of sand inside
  • Disconnecting all power lines and remove temporary connections susceptible to damage
  • Covering and securing all window and glass openings with storm shutters
  • Dismantling all temporary wood and fences that could be lifted by high winds
  • Covering all hazardous materials and any materials with contamination potential
  • Securing heavy equipment including cranes, elevators, sky-lifts, and other high-altitude equipment
  • Preparing a first shift crew, relief crews, standby crews and cleaning crews
  • Reviewing Builders Risk insurance coverage terms pertaining to storm events. It is prudent to keep a file of all insurance documents properly stored, preferably at a different location
  • Review contract language pertaining to requests for contract extensions due to weather delays

Risk Management for Tenants

Education is paramount when it comes to keeping tenants apprised of best practices for reducing risks in their spaces and units. Property Managers should maintain ongoing dialog with tenants regarding activities they are performing, what potential risks are involved, and what risk reduction measures are being implemented. For instance, a restaurant or café amenity may require fire hood inspection, quarterly appliance maintenance, and regular management of grease traps. A few basic measures include the following:

  • Perform walk-through inspections of tenant spaces (annually at a minimum)
  • Provide tenants with updated Emergency Contact info (quarterly or ad hoc as needed)
  • Request renewed Certificates of Insurance annually from all tenants and building vendors

Regarding Certificates of Insurance (COIs), it is important to ensure that these are valid (not expired) and that they meet the minimum standards as outlined by your ownership and lease contracts. Effectively managing COIs can be a heavy lift depending on the profile of a given portfolio, so it is crucial to work in tandem with your insurance broker to ensure you have efficient systems in place.

Election Season

While not as frequent as weather events, political elections are predictable and can trigger civil unrest, protests, and riots. Our firm had managed one such claim in a large metropolitan city where we were able to claim police, fire department, sanitation, and EMT’s overtime expenses under the “Protection of Property” clause. However, it is important to note that a specific loss may or not be covered, depending on the policy language and any exclusions that may apply. It is important to check your specific insurance policy for “Riot and Civil Commotion”, “Vandalism, Malicious Mischief”, “Business Income Coverage”, “Glass Coverage”, and “Civil Authority Coverage” when analyzing your insurance coverages, ensuring the appropriate risk transfer language is in place.

Contractual Review

It is important for Property Managers to understand the liability obligations in their lease agreements, as these can differ from state to state and even between municipalities. In New York City for example, store fronts and sidewalks in front of a business can expose a building owner to liability even when their business is closed. The city relies on property owners to maintain the sidewalks in front of and adjacent to their property, including repairs and removal of snow, ice, or debris. We encourage property owners in this jurisdiction to perform repairs to their sidewalk before a condition becomes a defect, which could end up resulting in a Notice of Sidewalk Violation.

Below are two such examples of the administrative codes:

  • Property owners are responsible for installing, repairing and maintaining sidewalks adjoining their properties (Section 19-152 of New York City’s Administrative Code)
  • Property owners are potentially liable for personal injuries caused by their failure to maintain the sidewalk free of defects (Section 7-210 of the New York City’s Administrative Code)

Pedestrians injured in a slip and fall due to a defective or dangerous sidewalk, or due to snow and ice on a sidewalk, have recourse primarily against the property owner under Sections 19-152 and 16-123 of the NYC Administrative Code. It is imperative that your insurance broker understands the language in your lease agreements when designing coverage, ensuring risk is appropriately transferred based on the circumstances of your specific property.

Protecting the value of your asset doesn’t stop at simply paying premiums for insurance coverage. The capital expenditure allocated to risk mitigation is money well spent and can greatly reduce the impact of future loss events. Better loss results will ultimately drive a positive financial impact in a multitude of ways, so it is most certainly worth the investment of time and resources. Proactive preparation, communication, and buy-in from staff and building vendors will go a long way towards ensuring you maintain best-in-class assets for your owners and a safe environment for tenants.


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