The derecho that tore across the Midwest this week is likely to produce property, flood and business interruption claims, with prolonged power outages putting service interruption coverage under particular pressure, according to HUB International’s North American property practice leader.
Blake J. Giannisis (pictured), executive vice president and North American property practice leader at HUB International, said the storm’s insurance impact will depend on physical damage and how property programs treat severe convective storm, flood and time-element exposures.
“This particular event was one of significant power outages and widespread flooding. That equates to both physical damage as well as business interruption/loss of income/revenue for insureds that were impacted,” Giannisis said.
A derecho moved across parts of the Midwest and Ohio River Valley on August 11, producing widespread 70 mph to locally 100-plus mph straight-line winds from northeastern Illinois into northwestern Indiana, according to the National Weather Service. A peak gust of 99 mph was recorded at Gary/Chicago International Airport.
More than 360,000 homes and businesses were still without power on Friday, according to PowerOutage.us data cited by Reuters, including more than 215,000 in Indiana. NIPSCO said full restoration for its affected customers was targeted for August 21.
Giannisis said a key distinction is that a derecho will generally fall within severe convective storm treatment rather than named windstorm provisions associated with hurricanes. “That matters because while there are exceptions, there is a higher probability of the coverage in a policy being subject to larger limits and smaller deductibles as compared to that of a named storm,” he explained.
The current soft property market may also have reduced the extent to which insureds face restrictive SCS terms. US property insurance rates fell 13% in the second quarter of 2026, according to Marsh, as capacity and competition continued to drive reductions.
Even so, Giannisis said SCS sublimits and deductibles will be an immediate focus. Flood exclusions or larger flood deductibles may also constrain recovery, particularly in high-hazard areas.
Wind damage is expected to include roofs, wind-borne debris and outdoor property. Flooding adds water seepage, intrusion and mold, with mold coverage often heavily limited or excluded.
“These types of physical damage can lead to large business interruption claims as a result of resulting service interruption,” Giannisis said. “Power outages can have a particularly large effect on manufacturing, healthcare, and food related industries; all of which exist in the footprint of the impacted area.”
Giannisis said outages may last long enough to clear waiting periods for service interruption coverage, but extended downtime could also exhaust available limits.
Civil authority coverage will depend partly on distance limitations, while companies whose own premises escaped damage may still suffer losses because customers or suppliers were affected.
“Contingent business income cover is limited in many cases and highly sublimited, if not excluded altogether for indirect customers and suppliers,” he said.
The event lands against a backdrop of persistently high severe convective storm losses. Swiss Re Institute said North American SCS insured losses reached $46 billion in 2025, following $59 billion in 2023 and $52 billion in 2024 at 2025 prices.
Despite the disruption, Giannisis does not expect the derecho by itself to halt falling property rates in the region. “Given where the market is (soft stage of the cycle), this event is not likely to reverse or even stabilize current overall property rate behavior on its own,” he said.
A shift could emerge if the derecho is followed by other major catastrophe losses, particularly a large hurricane or earthquake striking a heavily insured area, he said. Underwriters may meanwhile apply greater scrutiny to businesses with repeated SCS exposure.
For affected companies, the immediate priority is loss mitigation and documentation. Giannisis recommended stabilizing damaged sites, notifying insurers through brokers, engaging restoration specialists and bringing in forensic accountants where business interruption is involved.
“Document as much as possible, including pre-loss exposures and conditions,” he said. “Preserve everything as it will likely become a critical part of the proof of loss to underwriters and will also assist with the loss calculations.”
