Escape of water is one of the most significant risks that many property owners will face – with insurers paying out £2.5m every day for these types of claims. While a typical claim for burst pipe damage may run into thousands of pounds, we have dealt with escape of water claims running into hundreds of thousands, or even millions of pounds.
Here, we discuss some common causes of escape of water claims, and how to reduce the risks of such incidents occurring.
Escape of water incidents can have a variety of causes – from a failure of heating equipment, which can cause pipes to freeze and burst – to a failure in the plumbing system (for example relating to fittings or valves) or accidental or malicious physical damage to any part of the water system. Escape of water claims, which account for a quarter of all insurance claims relating to flats, most commonly result from weather-related damage, poor maintenance of the water system, or a combination of these two factors.
In extremely cold weather it is common for pipes to freeze and burst if they are not properly insulated. During the winter of 2010, which saw the UK’s coldest December since records began, the ABI* says insurers handled 3,500 claims for burst pipe damage every day. The ABI* estimates the average claim for burst pipe damage is between £6,500 and £7,500.
Sizable losses can occur as a result of poor maintenance of the water system, or errors during construction or remedial work. We recently handled a claim following a major escape of water incident in an apartment block, where the initial loss was calculated at £400,000. However, mistakes were subsequently made during the repair work, which resulted in a further escape of water and an additional £200,000 loss.
There are sensible precautions that will reduce some of the most common escape of water risks – such as ensuring that pipes and tanks are properly lagged, small leaks and cracks are repaired promptly, and valuable items are not left directly underneath ageing or vulnerable pipework. Property owners should also ensure that escape of water risk is factored into business continuity and disaster recovery plans, to ensure that anybody who may be required to help deal with an escape of water incident can be reached in the event of an emergency.
Organisations should consider risks that are particular to their property or their assets, and how these may best be mitigated. For example, apartment blocks are particularly vulnerable, because a burst pipe can lead to water damage on a number of floors and substantial losses. Sophisticated water leak detection systems are now available that can automatically cut off the water supply if a leak is detected. Such systems are also increasingly being used in a variety of commercial and public buildings, for example to protect valuable archives in museums and libraries.
Vacant properties are particularly vulnerable to water damage, as it is easy for small leaks and cracks to go undetected and become more serious. There is also increased risk of intruders gaining entry and causing malicious or accidental damage to the water system. As soon as property is left unoccupied, check with your insurer what you should do to comply with your policy conditions.