Property and casualty insurance addresses a number of risks for businesses. These include the risk of damage from catastrophic natural events, such as wildfires, floods, and severe storms.

As climate change affects weather patterns worldwide, once-predictable natural disasters become increasingly difficult to predict – as well as more common. Here’s what you need to know.


Natural Disaster Risks are Increasing

Since 1980, the United States has experienced 323 weather and climate disasters that imposed at least $1 billion in damages each, according to the National Oceanic and Atmospheric Administration (NOAA). Altogether, these 323 events cost U.S. residents, businesses, and insurers over $2.195 trillion.

The rate of these events has increased dramatically in recent years. The 1980s saw only 33 such events. In the 1990s, the number rose to 55. In the 2000s, the U.S. experienced 67 weather and climate disasters that cost over $1 billion. The 2010s saw 128 such events, or 12.8 per year – nearly a fourfold increase from the 1980s.

Twenty of these events occurred in 2021 alone – nearly as many as had occurred in the entire decade of the 1980s. Catastrophic weather and climate disasters are becoming more common.


How Insurance Covers Natural Disaster Risks

Several different types of risk and damage fall under the heading of weather and climate risk. Common examples include:

  • Severe storms, including severe winter storms
  • Wildfires, droughts, and heat waves
  • Floods and tsunamis
  • Hurricanes, typhoons, and tropical cyclones

Not all insurance policies protect a business automatically against every risk that can result from severe weather and climate changes. For instance, many businesses must purchase separate flood insurance, as their standard policy doesn’t cover flood damage.

Some policies may address a particular weather or climate risk, but the policy may not cover everything that could be damaged in a severe natural disaster. For example, a standard policy may not cover damage to outbuildings or to certain types of business equipment. Organizations that need this coverage may have to purchase it separately.


Do You Have the Insurance You Need?

Property and casualty insurance aims to protect people and property from various risks. Many of today’s standard coverage packages, however, were designed in a time when climate disasters were less common and less costly. To ensure your business is covered for today’s risks, you may need to reconsider your coverage.


As risks change, insurance coverage must also change. Make sure you’re covered for the risks your organization actually faces. Talk to the team at Odell Studner today to learn more.