What Is Hail, and How Does It Impact Commercial Real Estate?

Hailstorms are costly, especially for commercial real estate (CRE) owners. From depreciating assets to the risk of denial during a hail claim, the impact of hail on commercial properties demands proactive management — which requires an understanding of what hail is and how it happens. 

What Is Hail, and How Does It Form?

Hail forms in thunderstorm clouds when updrafts carry raindrops into extremely cold areas of the atmosphere, causing them to freeze. These ice particles then collide with water droplets, accumulating more ice until they become heavy enough to fall as hailstones.

Stronger updrafts keep larger hailstones in the atmosphere longer, allowing them to grow in size. Depending on the air temperature, smaller hailstones may melt into raindrops before they reach the ground. 

Where Is Hail Most Common?

Hail Alley, a region in the United States stretching from Texas to South Dakota, experiences the highest frequency of hail storms.

Hail Alley map

While Hail Alley is known for the highest hail risk in the US, other regions also face significant hail threats. 

You’re more likely to see thunderstorms and hail in places where warm air frequently meets cooler air. Your hail risk may also be higher if you're near mountains or at high altitudes, as these areas often experience strong updrafts that encourage hail formation.

Being outside of Hail Alley does not ensure protection from hail damage, but it may reduce frequency of impacts. 

Curious about your hail risk? Get a custom risk analysis at the property, portfolio, or enterprise level.

When Does Hail Fall?

Hail storms can happen at any time of day, and nearly a third occur at night.

While hail storms can occur at any time of year, they’re more frequent during spring and early summer, when thunderstorms are common. April through September is generally considered hail season in the United States, though this can vary by specific location.

In 2023, there were 132,000 storm swaths and 312 days of hail according to HailSolve's data.

How Big Does Hail Get?

Hailstones can range in size from tiny pellets to grapefruits. Here's a hail size chart for reference:

For CRE owners, understanding these sizes can put hail reports into perspective. The probability of hail damage must also consider the specific roof system, age of building, and condition of building, however.

What is Hail Damage?

Hail damage is ultimately defined by your insurance policy. There are no nationally recognized standards or definitions for hail damage, which creates confusion and complexity when documenting damage and filing claims. However, a practical way to think about damage is any impact by hail that alters the condition of your roof or other property structures. 

In 2022, more than 6.8 million properties experienced hail damage, and State Farm paid out over $4 billion in hail claims in 2023. The impact of hail damage is wide, and so is the need for comprehensive insurance coverage that considers building envelopes on a property-by-property basis and slots into a wide hail risk management strategy.

Read more: 10 Hail Risk Management Terms CRE Owners Should Know

Degrees of Hail Damage

Hail can cause varying degrees of damage to commercial properties, from minor cosmetic issues to severe structural damage.

• Light Hail Damage — Often overlooked, light hail damage can still pose risks. For example, minor roof dents may go unnoticed but can lead to bigger problems over time.
• Moderate Hail Damage — Moderate damage might be more apparent, but still varies in visibility. This type of damage may or may not immediately affect the functionality of your property, but can lead to future issues.
• Significant Hail Damage — Significant hail damage is functional and not difficult to find, significantly affecting the lifespan of the roof system.
• Catastrophic Hail Damage — Catastrophic damage is both functional and obvious, puncturing roof systems and requiring immediate repairs and replacement. 

Why Is Hail Damage So Complex?

Several factors contribute to the complexity of hail damage:

• Every storm is different in intensity and duration.
• Different roof systems react differently to hail.
• Age and condition of buildings can obfuscate and alter the damage.
• There is no definition or standard of documentation 

Identifying and Managing Hail Risks

Hail risk is the exposure to property loss or missed business opportunities as a result of the complexities surrounding hail. It has five dimensions:

• Notification Risk: The risk of a property being affected by a hail storm without your knowledge. 

• Identification Risk: The risk that hail damage may be overlooked or misidentified due to the lack of standards for quantifying and identifying hail damage.

• Restoration Risk: The risk of inadequate project management leading to unfavorable hail claim outcomes, including a full or partial denial.

• Insurance Risk: The risk of volatility or unpredictability due to mismanagement of hail-related coverage or insurance relations efforts.
• Enterprise Risk: When the inability to reconcile and manage hail complexity at scale results in opportunity loss.

Effective hail risk management mitigates each of these risks via implementing regular risk assessments, optimizing insurance coverage, and implementing damage mitigation strategies. By catching damage early and understanding its implications with insurance from a portfolio perspective, you can save millions in roof replacement costs, make better choices during renewals, and maintain a healthier group of assets. 

Check out Hail Risk 101 to see what an effective hail risk management program looks like.

Protect Your Assets with Effective Hail Risk Management

Understanding and managing hail risk is an important part of a portfolio’s risk management strategy. By integrating hail risk management into your existing risk assessment protocols, you can protect your assets, reduce financial losses, and ensure the longevity of your properties.

For comprehensive hail risk management, consider HailSolve's Portfolio Risk Management solution, where CRE owners can use one sophisticated vendor for hail risk strategies, monitoring, and restoration.

Lean more about Portfolio Risk Management