Lessons learnt from escape of water major losses
- Paul Redington Property Major Loss Team at Zurich Insurance, discusses some of the significant issues causing Escape of Water (EOW) claims
- ABI stats show that from 2014 to 2018, the average cost of an EOW claim grew by 40% from £2,119 to £3,242
- At Zurich, we are seeing a huge number of claims attributed to poor workmanship during the construction phase
Paul Redington Property Major Loss Team at Zurich Insurance, discusses some of the significant issues causing Escape of Water (EOW) claims – whilst highlighting the factors property managers should consider to help mitigate the loss.
“According to The Association of British Insurers (ABI) members pay out approximately £2.5 million every day on EOW claims. ABI stats show that from 2014 to 2018, the average cost of an EOW claim grew by 40% from £2,119 to £3,242. At Zurich, we’re continuing to see serious EOW claims year on year – some even breaching seven figures.
Here I’ve combined some recent examples of our EOW claims experience, along with our findings:
EOW causes explained
At Zurich, we are seeing a huge number of claims attributed to poor workmanship during the construction phase. Recently we responded to a claim due to leaking soil stacks at a multi-storey block – where the pipes had been incorrectly set directly in concrete by sub-contractors. Furthermore, expansion joints were not installed, to accommodate normal thermal expansion and contraction of the pipework. Stresses were created, resulting in fatigue failure at the joints – slowly releasing contaminated water into the voids within the block of flats, not only causing damage, but also putting the health of residents at risk.
Quick projects can cost you time later
Another claim highlighted the result of a rushed construction project, by a contractor under pressure. In that instance, partitions were laid into holes cut into concrete screed rather than placed upon it. Following escape of water, the poor workmanship created perfect channels for spreading water throughout the property. This resulted in a claim reserved at a staggering £800,000 – whilst a quality installation, would have led to damage in low tens of thousands.
It’s also important to remember the human cost of all this. An Escape of Water can be stressful and massively disruptive for families and individuals. For example, in 2014 an escape occurred in a large residential development in London during the festive period; whilst occupants enjoyed their break.
When the leak was discovered, the Fire Brigade were called and they promptly turned off the water – however, they also turned off the water to two unaffected blocks. This resulted in all occupants being evacuated on to the street in the middle of the night. A Christmas that they would never forget – for all the wrong reasons. But with our help, the inhabitants were relocated quickly – whilst work was initiated to dry the impacted properties and restore their homes.
Following thorough analysis, Zurich determined a compression joint within an internal riser cupboard was the source of the problem – it was caused at the initial installation stage, by a contractor inadequately tightening the joint. Sadly, this is a very common occurrence.
18 months later and during further investigative works – a section of the same pipework needed to be removed. The piece was replaced, and a new joint fitted. Regrettably Zurich received another call from the policyholder saying that a further leak had taken place on that same section of pipework. The new contractor had also failed to adequately tighten the joint, causing additional damage – whilst upsettingly, residents experienced further upheaval as their homes were again uninhabitable. We worked with the insured and the residents to help them minimise disruption as far as possible.
Avoiding water damage and major disruption
So, what can we learn from these examples? Well, quite simply, many of them could have been avoided.
In larger residential properties, poor workmanship can have significant financial implications. Therefore, improving the quality of workmanship is key, and it comes not just from employing reputable contractors – but also ensuing that a stringent quality assurance process is maintained.
Rest assured that if a claim does occur, we take pride in our ability to respond to our policyholders and their occupants at their time of need. The knowledge and experience within our Property Major Loss Team makes for a market leading large loss proposition, but we don’t rest on our laurels and constantly aim to keep abreast of loss prevention techniques. We also understand that due to the situation with Coronavirus (COVID-19) your residents will be spending more time at home with family members, so it’s never been as important to provide reassurance to our clients, that should they need to make an EOW claim, we are here to do the right thing for our customers.”
For more information speak to your Risk and Insurance Consultant.