{"id":173591,"date":"2024-06-10T13:29:04","date_gmt":"2024-06-10T19:29:04","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=173591"},"modified":"2024-06-10T13:31:04","modified_gmt":"2024-06-10T19:31:04","slug":"most-expensive-investment-property-losses","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/most-expensive-investment-property-losses","title":{"rendered":"The 5 Most Expensive Investment Property Losses\u2014Plus Damage Estimates and Mitigation Tips"},"content":{"rendered":"\n<p><em>This article is presented by<\/em> <em><a href=\"https:\/\/nreig.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">NREIG<\/a>. Read our&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/editorial-blog-guidelines\" target=\"_blank\" rel=\"noreferrer noopener\">editorial guidelines<\/a>&nbsp;for more information.<\/em><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Property insurance provides crucial protection for investment properties, offering financial protection against a variety of risks that could otherwise lead to devastating losses. According to the Insurance Information Institute, about one in 20 insured homes file a claim each year. And while some perils that cause the costliest damage are unavoidable, such as hurricanes, many can be mitigated through proactive measures.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">These are the five most expensive perils for investment properties and provide tips on how to prevent and mitigate these risks.&nbsp; &nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">1. <span data-preserver-spaces=\"true\">Theft, Vandalism, and Malicious Mischief\u00a0<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Theft, vandalism, and malicious mischief account for a significant portion of real estate investment property claims, particularly those undergoing renovation or vacant while on the market to sell. These properties often have low traffic and are prime targets for thieves seeking new appliances, HVAC systems, construction materials, and tools.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Theft and vandalism losses can vary from a few hundred to tens of thousands of dollars. It all depends on what a thief\/vandal is after and what they can take\/damage before the threat of discovery scares them off. Our data concludes that the average cost of a break-in at an investment property ($8,000) is four times the national average ($2,000) for an owner-occupied home.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Theft, vandalism, and malicious mischief mitigation tips\u00a0\u00a0<\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Keep the property looking lived <\/span><span data-preserver-spaces=\"true\">in<\/span><span data-preserver-spaces=\"true\"> by maintaining the yard and ensuring proper lighting.&nbsp;&nbsp;<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Secure doors and windows with sturdy hardware, and consider installing an alarm system with monitoring.&nbsp;&nbsp;<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Ask neighbors to <\/span><span data-preserver-spaces=\"true\">keep an eye out<\/span><span data-preserver-spaces=\"true\"> for suspicious activity and report it to you and the police.&nbsp;&nbsp;<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Use plywood, steel, or plexiglass shields to protect the property when appropriate.&nbsp;&nbsp;&nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">2. <span data-preserver-spaces=\"true\">Water Damage\u00a0<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Water losses, most often caused by burst pipes during winter freezes, are <\/span><span data-preserver-spaces=\"true\">one of<\/span><span data-preserver-spaces=\"true\"> the most common yet preventable losses we see. These incidents can lead to extensive damage. While the data we\u2019ve collected over the last five years shows that the average water loss ranges from $6,000 to $16,000 in damages, recent losses in our program reach up to $138,000.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The reason for this wide range<\/span><span data-preserver-spaces=\"true\">? If<\/span><span data-preserver-spaces=\"true\"> the leak is discovered quickly, damage can be minimized, but if the water runs for several days before anyone notices, the loss can be catastrophic.<\/span><span data-preserver-spaces=\"true\"> Cleanup is messy, and it can take a significant amount of time to restore a property to an inhabitable or sellable condition after a water loss.&nbsp; &nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Water damage mitigation tips&nbsp;<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">Occupied properties: <\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Insulate pipes in exterior walls, crawl spaces, and attics.&nbsp;&nbsp;<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">In cold snaps, advise tenants to open the cabinet doors under sinks to allow heat to circulate <\/span><span data-preserver-spaces=\"true\">around<\/span><span data-preserver-spaces=\"true\"> uninsulated pipes and let warm water drip overnight, especially from faucets on outside walls.&nbsp;&nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<p><span data-preserver-spaces=\"true\">&nbsp;<\/span><span data-preserver-spaces=\"true\">Vacant properties: <\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Set the thermostat to no lower than 55 degrees Fahrenheit.&nbsp;&nbsp;<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">If you <\/span><span data-preserver-spaces=\"true\">are unable to<\/span><span data-preserver-spaces=\"true\"> do so, have a property manager or neighbor check the house daily during cold snaps.&nbsp;&nbsp;<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Winterize the house by turning the water off at the street and draining the plumbing system.&nbsp; &nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">3. <span data-preserver-spaces=\"true\">Wind\/Hail\u00a0<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">As we&#8217;ll discuss further in the hurricanes and tornadoes section, wind and hail events have become increasingly frequent and severe. In early 2024 alone, multiple wind\/hail losses exceeded $30,000 in damages in our program, with the highest reported loss at $164,000. These events primarily impact Texas, Oklahoma, and Missouri, often resulting in roof damage, broken windows, and damage to detached structures like garages or sheds.<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"975\" height=\"554\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/06\/windhail-claims.jpeg\" alt=\"Wind\/Hail claims reported to NREIG from January 1, 2024 \u2013 March 31, 2024, by state\" class=\"wp-image-173593\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/06\/windhail-claims.jpeg 975w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/06\/windhail-claims-300x170.jpeg 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/06\/windhail-claims-768x436.jpeg 768w\" sizes=\"auto, (max-width: 975px) 100vw, 975px\" \/><figcaption class=\"wp-element-caption\"><em><span data-preserver-spaces=\"true\">Wind\/Hail claims reported to NREIG from January 1, 2024 \u2013 March 31, 2024, by state<\/span> &#8211; <a href=\"https:\/\/nreig.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">NREIG<\/a> <\/em><\/figcaption><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Wind\/hail mitigation tips&nbsp;<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">Property reinforcements: <\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Regularly inspect and repair roofs as needed.&nbsp;&nbsp;<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Install storm shutters or impact-resistant windows.&nbsp;&nbsp;<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Remind tenants to secure outdoor furniture and other items or store them inside when significant storms are forecasted. &nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">4. <span data-preserver-spaces=\"true\">Hurricane\/Tornado\u00a0<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">The increasing severity of weather events such as hurricanes and tornadoes has significantly influenced the cost of property insurance. Coastal states like Florida, Texas, and Louisiana are particularly vulnerable to hurricanes, which can cause extensive damage. For instance, Hurricane Ian in 2022 <\/span><span data-preserver-spaces=\"true\">resulted in<\/span><span data-preserver-spaces=\"true\"> $113.1 billion in damages, making it the third most expensive hurricane on record.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Tornadoes have also been notably destructive <\/span><span data-preserver-spaces=\"true\">as of late<\/span><span data-preserver-spaces=\"true\">, with a staggering 466 reported in just three consecutive months in 2023. These natural disasters often result in roof damage, broken windows, uprooted trees, and storm surges <\/span><span data-preserver-spaces=\"true\">leading<\/span><span data-preserver-spaces=\"true\"> to flooding.<\/span><span data-preserver-spaces=\"true\">&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Our internal data supports the claims many climate change experts and weather professionals have made: These weather phenomena are increasing in severity and frequency. Recent hurricane and tornado losses in our program have been substantial, with damage totaling up to $202,000 at one property and $250,000 at another.&nbsp; &nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Hurricane\/tornado mitigation tips&nbsp;<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">Property preparations: <\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Trim or remove damaged trees and limbs.&nbsp;&nbsp;<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Secure loose gutters and downspouts and clear debris to prevent water damage.&nbsp;&nbsp;<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Retrofit to secure and reinforce roofs, windows, and <\/span><span data-preserver-spaces=\"true\">doors, including<\/span><span data-preserver-spaces=\"true\"> garage doors.&nbsp;&nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<p><span data-preserver-spaces=\"true\">Safe rooms:&nbsp; <\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Build safe rooms in basements, atop concrete slabs, or in first-floor interior rooms.&nbsp;&nbsp;<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Ensure safe rooms <\/span><span data-preserver-spaces=\"true\">are adequately anchored<\/span><span data-preserver-spaces=\"true\">, can withstand high winds, and are made of materials resistant to flying debris.&nbsp;&nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">5. <span data-preserver-spaces=\"true\">Fire\u00a0<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Fire is <\/span><span data-preserver-spaces=\"true\">both<\/span><span data-preserver-spaces=\"true\"> the most expensive and one of the most common types of residential investment property claims. The Insurance Information Institute (III) reports that the average house fire causes approximately $40,000 in damage.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">However, claims can escalate significantly, as exemplified by a recent fire causing $375,000 in damage to a property in our <\/span><span data-preserver-spaces=\"true\">program,<\/span><span data-preserver-spaces=\"true\"> and another resulting in a $460,000 loss. <\/span><span data-preserver-spaces=\"true\">Fires can be destructive <\/span><span data-preserver-spaces=\"true\">not only to the structure itself but also to<\/span><span data-preserver-spaces=\"true\"> a tenant\u2019s contents, home appliances, and neighboring properties.<\/span><span data-preserver-spaces=\"true\"> &nbsp; &nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Fire mitigation tips&nbsp;<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">Occupied properties:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Test smoke alarms monthly to ensure they are operational.&nbsp;<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Provide fire extinguishers and educate tenants on their proper use.&nbsp;<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Install fire suppression products like StoveTop FireStop to contain kitchen fires.&nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<p><span data-preserver-spaces=\"true\">&nbsp;<\/span><span data-preserver-spaces=\"true\">Vacant properties: <\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Layer security measures to prevent unauthorized entry.&nbsp;<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Keep the property looking like it has been lived in to deter vandals.&nbsp;<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Encourage neighbors to report suspicious activity.&nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Final Thoughts<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">While some of the most expensive property losses, such as those caused by hurricanes, tornadoes, and other severe weather events, are unavoidable, many risks can be mitigated through proactive measures. Property insurance remains a critical safety net, but to avoid premium increases and extensive losses, you must take additional mitigation steps.<\/span><\/p>\n\n\n\n<div class=\"wp-block-group border border-gray-200 p-6 rounded-md has-slate-50-background-color has-background\"><div class=\"wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow\">\n    \n  <div \n    id=\"segemnt-view-event-block_7ff4e1a2ba786c01181c2559aa89391b\" \n    class=\"  \"\n    x-intersect:enter.once=\"\n      analytics.track('DoorLoop Blog Sponsor View', {\n        referrer: 'https:\/\/www.biggerpockets.com\/blog\/most-expensive-investment-property-losses',\n              })\n    \">\n    \n  <\/div>\n  \n\n\n<h3 class=\"wp-block-heading has-text-align-left mt-0\"><strong>This article is presented by NREIG<\/strong><\/h3>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"1500\" height=\"1351\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/03\/nreig-logo.png\" alt=\"\" class=\"wp-image-168980\" style=\"width:303px;height:auto\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/03\/nreig-logo.png 1500w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/03\/nreig-logo-300x270.png 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/03\/nreig-logo-1024x922.png 1024w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/03\/nreig-logo-768x692.png 768w\" sizes=\"auto, (max-width: 1500px) 100vw, 1500px\" \/><\/figure>\n\n\n\n<p>NREIG is a national, independent insurance agency, offering the most comprehensive, and flexible industry-leading insurance program for residential real estate investment properties. Our team of advisors and specialists delivers unmatched service and streamlined insurance solutions for investors with single-family and small multifamily rentals, renovation projects, and vacant homes. Seamlessly make coverage changes as your portfolio fluctuates, and pay only for the coverage you need each month.<\/p>\n\n\n\n<div id=button-custom-event-block_f27fff45cd1f7fd3618fffdf21839ccc class='button-custom-event'>\n      <a href=\"https:\/\/go.nreig.com\/l\/1008742\/2024-03-04\/533ng7\" x-on:click=\"window.analytics.track(&#039;Sponsored Blog CTA Click&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/most-expensive-investment-property-losses&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\" rel=\"noopener\">Learn more about NREIG<\/a>\n  <\/div>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\"><\/div>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>According to the Insurance Information Institute, about one in 20 insured homes file a claim each year. And while some perils that cause the costliest damage are unavoidable, such as hurricanes, many can be mitigated through proactive measures.\u00a0<\/p>\n","protected":false},"author":613729,"featured_media":173594,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7401],"tags":[],"class_list":["post-173591","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insurance"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/173591","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613729"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=173591"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/173591\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/173594"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=173591"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=173591"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=173591"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}