Water Damage Claims on the Rise: Are You Prepared?

MARCH 2, 2021

Non-weather water damage has become a leading cause of property-related losses in the U.S., surpassing other types of homeowners claims in both frequency and cost. Approximately one in 50 homeowners files a water-damage claim each year in the U.S. Since 2015, the number of annual water claims costing more than $500,000 has doubled, and claims greater than $1 million have tripled.

The rise of non-weather water damage is costing insurers and their policyholders billions of dollars in losses every year. It is also creating additional challenges including policy cancellations, non-renewals, and drastic premium changes.

Primary Drivers of the Increase in Water Loss Claims

The most common cause of water damage is home appliance or structural failure. Aging homes with broken appliances, old pipes and valves, or worn-out washing machine hoses are partly responsible for the increase in overall claims. Newer homes with more bathrooms and a laundry room on an upstairs floor are also contributing to the rise in water damage.

Water damage vulnerability points in your home include:

• Washing machine
• Dishwasher
• Roof
• Toilet
• Bathtub/shower grout and edge leaks
• Water heaters
• Refrigerator leaks
• Windows/walls
• Basement

Some insurers decide not to renew customers who fail to take preventative steps to prevent water damage, such as installing water shut-off systems. But taking simple, preventive measures can help you avoid policy cancellation and costly water damage losses. USI Insurance Services’ personal risk specialists provide proactive steps you can take to prevent or reduce water damage and information on what to do after a loss has occurred.

Homeowners Insurance Concerns

Carriers are not obligated to pay every water damage claim. As was reported in The Wall Street Journal, standard homeowners policies have excluded storm surge and river flooding since the 1960s. Likewise, homeowners policies typically cover “sudden and accidental” damage that could be caused by an unexpected water pipe burst or leak, a broken appliance hose, overflowing toilets, and water heater failures — but not water damage from routine plumbing maintenance. Homeowners who neglect an obvious slow leak for months until the damage reaches critical levels could get into a coverage dispute.

Signs of a Potential Water Leak in the Home

While prevention is your best bet, it can be difficult to identify moisture damage in walls. Besides actual water dripping or leaking, look for yellow staining or water spots on the walls and ceiling, bubbling paint or wallpaper separating from the walls, and expanded caulk at your baseboards. Also, take notice to address any of these additional warning signs that your home may be at risk:

• An increased monthly water bill
• Banging pipes
• Rust stains
• Moisture in the walls or on the floor
• Signs of wet soil erosion near the foundation
• Buckling tilework
• Warped or buckling flooring
• Sounds of dripping, hissing or rushing water not normally heard in your home, coming from within walls, under floors, or even in garage

Take These Preventative Steps to Manage Water Damage Risk

All the above are potential indicators of plumbing problems that may be avoided by taking proactive measures. Practice annual routine maintenance and visual inspection of toilets and toilet components, water heaters, water supply lines, and roof systems:

• Determine that caulking is watertight in tubs and showers, and watch for dripping under sinks.
• Inspect water hoses in all appliances, and only use a washing machine or dishwasher when someone is home.
• Replace supply hoses every five years, even if there is no obvious deterioration or wear. Some signs of deterioration may not be visible until it is too late.
• When replacing washing machine supply hoses, also replace supply lines to toilets and ice maker lines. Always choose a reinforced steel braided hose over traditional hoses. These will last longer, and many include check valves to stop the water flow in the event of a hose burst, making it far less likely to create catastrophic water damage.
• Set the thermostat to at least 65°F in winter months, let faucets drip on unusually cold days, and insulate pipes to reduce the risk of frozen pipes.
• Know where the shut-off valve is for the main water supply, and teach other family members how to shut off the main water valve in the event of a water leak emergency. Consider turning off the water supply if you will be leaving your home for any extended period.
• Install smart home technology with water leak detection devices, and/or smart leak protection systems that integrate a water pressure sensor, temperature sensor, and built-in shut-off valve that will automatically shut off the water supply in the event of a leak.

Contact your USI consultant to learn more about our solutions and services designed to protect individuals and families. We can help you identify your personal water damage exposures and provide targeted solutions to address these risks.