Insurance 101 - My Personal Claim: Interior Water Damage and evaluating Leak Defense Systems

"Oh, the joys of home ownership!" -In 20+ years of specialty insurance and risk advisory, that phrase often follows with an unfortunate property claim discussion. All homeowners should familiarize themselves with the standard and regional risks associated with insuring and protecting their home. There are differences in policy wording per insurance company, per state - and it can be challenging for some policyholders to decipher the right coverage election to avoid a large loss scenario or a coverage exclusion.

Water damage is responsible for more homeowner’s claims than fire, storms and theft. The main culprits lurk behind appliances, under sinks, and inside walls. Leaking pipes, major appliance leaks, washing machine hoses, and water heaters are the more mundane—but more common—water damage risks. There are many forms of water loss where a homeowner can find themselves in trouble:

1. Roof leak -- entrance of water from damage or a flaw in the roofline, trim, or shingle materials, traditionally covered by your home policy's 'wind & hail' deductible.
2. Flood -- naturally occurring rise of surface water, entering a structure and causing property damage; coverage must be purchased on a separate, basic or excess "flood" policy.
3. Wind Driven Rain -- high winds driving water through windows, doorways, and under roof decking; a regional risk factor commonly excluded from homeowners policies.
4. Interior leaks -- Interior water damage traditionally caused by leaking pipes, appliance leaks or from seepage & leakage from an unknown source.

I recently found myself with an interior water leak, and we went through weeks of isolating and debating where it was coming from. The water damage was in our master shower, on a shared wall with our custom closet. There were trademark signs of water damage: cupping on the hardwood floor, and discoloration on the trim, sinking of the travertine floor tiles, and breaking grout adjacent to that shared wall. We called a structural engineer to get under the house and diagnose the problem, which we then localized to a pipe leak on the interior of the wall.

We filed a claim, I called my contractor, and we got to work. After the closet was moved out for storage, and the cabinetry disassembled, we had the flooring, subfloor and framing redone. The source of the leak was a tiny puncture in a copper pipe at the top of the wall, that likely occurred when the drywall was replaced during renovation. When the rainhead shower was on, a steady trickle of water ran down the expanse of pipe, to the sub-floor - and under the house; this could have been happenning for months - or years! The plumber replaced the damaged pipe with a better, more resilient material, and we began the process of putting our closet back together. Some water leaks, such as a pipe break are considered 'sudden and accidental' - but in our case, it was a long period of time the leak was occurring without our knowledge. Not all insurance companies will cover a 'leakage and seepage' claim; luckily, we have very broad coverage that removes that exclusion.

Proactively, we decided to install a leak defense system for our home. Essentially, this is a device that monitors the water pressure in all lines, and can indicate and isolate a leak in 60-120 seconds, and shut down the main water line for the entire home. There is an app that will alert the homeowner(s) of this 'shut-down' and there are options to integrate the leak defense system with your monitored burglar and fire alarm, for added protection.

We had a pre-install assessment with our plumber, and then sourced the 'system/equipment' from one of the industry's most notable companies; Sentinel Hydrosolutions: Sentinel Hydrosolutions - Leak Defense Systems. Our system equipment was about $2,200, and installment quote was about $1,900 - so approximately $4K to have the system installed. A small device with monitor, and equipment under the house to activate - with a solid warranty. Our insurance company paid for the installation and equipment, so there was no out of pocket expense to us. We view this as an investment in the safety and maintenance of our home, and we also receive a good home policy credit.

Check with your home insurance company and see if installing a "leak defense system" will offer you a policy credit, and as part of a water claim, if the company will pay for all -or a portion of the parts and installation/labor.

So if your home is equipped with a manual water shut-off valve, it's only as good as knowing when to shut the water down. We opted for the automatic shut-off device in the event that we were traveling, at work, or away from the home. This is also a great solution for people with secondary or seasonal properties - especially in colder climates.

Water Shutoff Valves

1. Teach everyone in your household how to close the shutoff valves for the main water supply, sinks, toilets, and water-drawing appliances.
2. Tag the valves so there is no confusion during a crisis about which valve controls the various supply lines.
3. If you’re going away for a week or more, shutting off your main water supply can prevent a huge amount of damage.

Install a System to Help Alert You to a Potential Leak

·        Adding low temperature sensors to your alarm system will alert you to a dangerous drop in interior temperature that could lead to frozen pipes.

·        Adding water leak sensors around water bearing appliances will trigger an alarm to identify the presence of standing water leaking on to the floor.

·        Installing an automatic leak detection and water shutoff system can significantly reduce the potential for water damage -and in most states, generates a premium discount. One such system is made by Sentinel HydroSolutions and is called their Leak Defense System. 866-450-1190 or visit www.leakdefensesystem.com 

Sentinel HydroSolutions partners with many upscale insurance companies that we represent such as Chubb PRS, AIG PCG, PURE, Cincinnati PCG, Berkley One and Nationwide PCG.

-We can help!

Jason M. Pond, CAPI, CPRIA

Shareholder / Personal Risk Management

972-715-8703 – W /   972-342-8645 – C / jason.pond@swinglecollins.com

Swingle Collins & Associates:  13760 Noel Road, Suite 600  Dallas, Texas 75240, USA

www.swinglecollins.com