why water damage is a top insurance loss
Last year, over 500,000 water damage claims were made after Texas experienced a paralyzing winter storm that burst pipes and caused water damage.
Water damage is the second most common insurance claim, trailing closely behind wind and hail damage claims. Last year, over 500,000 water damage claims were made after Texas experienced a paralyzing winter storm that burst pipes and caused water damage. Let’s discuss why water damage is a top insurance loss, and what this means for you.
what is commercial water damage?
Commercial water damage is water damage that impacts your commercial building. It’s one of the most frequent and expensive claims small businesses face. According to The Hartford, about 75% of insurance losses come from water leaks.
Losses due to a high volume of water damage claims are thought to be contributing to the rise in insurance premiums. A recent Forbes statistic found that one in fifty insured property structures will submit a water-related incident each year. These claims cost on average $11,098.
top causes of commercial water damage
Commercial water damage can come from a variety of sources. Make sure you monitor your building and know the places where water damage can occur so you are prepared if it does. Here are a few things to look for when inspecting your building:
1. damaged roofs
Damage from the elements or lack of maintenance to replace missing shingles can allow water to cause further damage to your building.
2. broken or damaged pipes
Broken or damaged pipes are one of the main ways commercial properties experience water damage. Pipes can burst or become damaged causing a leak from freezing temperatures, poor building, or old age. Signs there is water damage from broken pipes are noticing water stains on the walls, floors, ceilings, or through musty smells.
3. damaged windows
Windows that are not properly sealed let moisture into the building which can cause mold, warmed or damaged wood, and more. Continued building maintenance can check your windows to make sure they are properly sealed and maintained.
4. damaged HVAC system
Over time, the HVAC system can become weathered or damaged, causing a leak. Frequent maintenance of your HVAC system can keep your building safe from this type of water damage.
5. weather or natural disasters
Water damage often occurs from weather or natural disaster, which is more challenging to control. Weather can cause damage to your building, even with the proper precautionary steps in place. Having a building with sufficient drainage systems and a disaster plan is one of the best ways to help prevent water damage.
6. leaking sprinkler
Like damaged pipes, your sprinkler system can freeze, leak or break– causing water damage. Signs of a leaking sprinkler could be wet walls, carpets, mold, or musty smells. Be sure to keep up with regular maintenance and inspection schedules for your sprinklers to prevent accidents like this from occurring.
how can you protect your business from water damage?
Water damage is not always unavoidable, however, you can take steps to make sure your building is fully equipped to avoid damage. One of the best ways to protect your business from water damage is with your water damage insurance policy. A policy that covers water damage helps with the financial liability costs. Be sure you understand the terms and conditions within this policy to better understand where you may be liable for costs.
Another way you can proactively protect your building from water damage is by implementing routine maintenance of your building so you’re not caught with a costly leak in the future.
Ways to do so are:
- Replace traditional hot water heaters every 10 years – (this is a major cause of water losses)
- Use an antifreeze fire sprinkler system
- Perform precautionary risk management to protect structures and BPP
- Wrap/insulate outdoor and indoor pipes in unheated areas
- Seal building cracks around water pipes where they enter structures
- Check areas requiring building insulation and repair
- Increase insulation where needed
- Maintain heat at a minimum of 55 degrees Fahrenheit during colder months
- Drain and winterize plumbing lines during the off-season (seasonal risks)
- Install heat monitoring devices alerting a central station if the temperature in a building falls below 55 degrees
- Install an automatic leak detection or automatic water shut off system
- Use stainless steel braided hoses instead of rubber
- Have a qualified plumbing contractor evaluate plumbing annually and repair as needed
- Provide detailed instructions for employees or tenants on what to do if they see a water leak
- Require regular offseason checks in each unit (Condominium Buildings)
The risks of water damage are high, which means it’s important to take the proper steps to mitigate that risk. According to Kelly Greene at Chubb, “commercial buildings are six times more likely to be damaged by water versus theft, and water damage is seven times more likely than fire.”
If your business already has a water damage insurance policy, the best practice is to review and understand that coverage. Sometimes to coverage you have does not align with the coverage you need for your specific business. Trust us, being prepared now will have the future you saying “thank you.”
For more resources on water damage insurance and property insurance, read our article here.