This year’s floods in the Townsville area showed only too clearly just how much damage water can cause for business and property owners. However, it doesn’t always need such a dramatic event for leaks to seep into our lives and for the costs to mount up.
That point was illustrated last week when Chubb launched its latest Insight Report – Get Smart about Water Leaks. It highlighted a 72% rise in the size of property-related claims by Australian homeowners due to internal water damage over the last five years – the average water damage claim has leapt from $17,627 in 2014 through to $30,361 last year.
Now, water damage is making up 34% of all of Chubb Australia’s property-related claims – so Insurance Business reached out to Michelle O’Dowd, underwriting manager, Australia and New Zealand, personal lines, at Chubb, to find out what’s going on.
“There are a couple of key reasons for the increase in water damage claims in Australia,” she explained. “Firstly, modern living requires more plumbed-in appliances using flexi hoses, more bathrooms and laundries on upper levels of homes and more open-plan living spaces. The typical manufacturer’s warranty on a flexi hose (plastic tube with steel braid around it) is 10 years, so replacement should take place within this time by a licensed plumber.
“And secondly, homeowners commonly focus on protecting their homes against fire and theft through locking devices, alarms systems and smoke detectors, while there is far less focus on protecting homes from water damage.”
The report itself highlights two claims examples that illustrate the extent of the damage that can be caused. In one of the cases, a family slept through an entire event and woke up to see a large part of their home ruined as a hot water pipe burst within the ceiling cavity of the ground floor lounge room. In another, the housekeeper of a long-term client with a historic home discovered water pouring out of a kitchen cupboard and found that it had spread across parquetry flooring in the open plan kitchen and leaked through the floor into the lower ground floor and basement. It was caused by a burst connection.
What the examples illustrate above all, however, is that damage can spread rapidly – and anyone can be hit.
“Water damage not only causes expensive damage to floors, carpets, furniture and ceilings, it often results in families having to vacate their homes for extended periods while repair work takes place,” said O’Dowd. “This can lead to large and unexpected increases in living expenses, which may or may not be claimable depending on the specific home insurance policy.”
Brokers trying to find the right policy for their clients may want to carefully examine the costs and duration provided for reasonable increases in living expenses – some policies may be available without limits.
Above all, however, they need to relay to their clients that the impact and cost of water damage losses is on the rise, and arm homeowners with useful information to protect their homes in the future – from shutting off valves when away, to regularly replacing flexi-hoses, and from maintaining bath/shower seals through to inspecting water lines for damage and corrosion.