A new report has found that the number of water damage claims resulting from leaks have surged in recent years, as other types of claims have declined in frequency.
The report, prepared by Verisk Analytics’ ISO unit, found that one in 50 homeowners filed a water damage claim each year, between 2013 and 2017. This 2.05% frequency rate is a noticeable increase from the 1.44% frequency rate annually for the period between 2005 and 2009. Industry figures have also highlighted that the increase in water damage claims occurred even as other types of claims (such as for fire) have declined in frequency.
ISO additionally found that, in 2017, the total amount of insurance payouts for water damage was $13 billion. The average claim cost about $10,000.
Several industry leaders have confirmed that water damage is just as rampant as the data reveals.
“Wildfires, hurricanes and tornadoes catch headlines, but the reality is that the No. 1 kind of risk that the everyday consumer has is a water claim,” USAA assistant vice-president of P&C innovation Jon-Mike Kowall told Wall Street Journal.
Major insurer Chubb has also recently released data outlining that the number of annual water claims costing more than $500,000 has doubled since 2015, while those that cost over $1 million have tripled.
Insurance executives say that there are several factors driving the costs higher. These include: aging homes with potential plumbing failures waiting to happen; expensive homes filled with valuables that are vulnerable to water damage; and more homeowners wanting their laundry room on an upstairs floor.
Although insurer’s payments are increasing, it does not mean they are obligated to pay every water damage claim. Wall Street Journal reported that, since the 1960s, standard homeowners’ policies have excluded storm surge and river flooding. Similarly, homeowners’ policies typically cover “sudden and accidental” damage, not routine plumbing maintenance. Insurance executives have warned that homeowners who neglect an obvious slow leak for months until the damage reaches critical levels could get into a coverage dispute.