Water Loss: Trends and Prevention

Ask anyone who has adjusted a property claim in the past few years and they’ll tell you a woefully watery tale. The industry is seemingly drenched with water losses with culprits ranging from an aging infrastructure to climate change. 

According to Insurance Bureau of Canada (IBC) estimates insurance companies pay more in claims for flood damages than for fire and theft combined. 

Unfortunately, the water damage trend is no fleeting phenomenon. According to municipal architects across Canada, the lack of funding dedicated to our ever-aging sewer infrastructure will only mean an increased number of claims. In an attempt to bring attention to this issue, and direct much needed upgrades to city sewer systems, the IBC has tracked the level of water claims. In 2009, water claims represented half of all claims; five years ago water claims equated to only one quarter of all claims. 

Some of Canada’s older cities, like Montreal and Toronto, understand this important issue. After being hit with a multi-million dollar lawsuit resulting from their aging sewers, the city of Montreal will be investing a record $357 million (CDN) in its water drainage infrastructure, according to an announcement released in August 2009.  Also, Toronto City Council approved a Basement Flooding Work Plan, which will include hundreds of millions of dollars worth of additional infrastructure upgrades.

Infrastructure, however, is only part of the problem; the rain events in summer 2009 were a major reminder of Mother Nature’s role.  With notable and near record breaking rainfall across Canada, and snow fall records already experienced in parts of British Columbia, severe weather continues to challenge our ability to keep water losses in check.  

Also noted by the IBC are the alarmingly high claims dollars paid related to water losses. In comparing the associated costs of two major rain events in Ontario in the summer of 2009 (one in Hamilton and the other in Ottawa), with those related to the multiple tornadoes that touched down, the water claims were approximately three times more costly (based on preliminary figures). 

With Canadian summers resulting in more rainy events and Canadian winters experiencing more extreme weather and temperature fluctuations, it’s expected that claims will continue to rise. 

It’s important for everyone in this industry to take a proactive, educational stance. We need to inform customers of ways in which they can help prevent water damage from occurring on their  property. 

Here are a few helpful tips posted on many Canadian municipalities’ websites:

  • Check for and repair leaks in walls, floors, windows and foundations;
  • Clear overflowing eavestroughs and downspouts of leaves and other debris that prevent proper drainage;Make sure your disconnected downspouts are draining properly, ideally 1.8 meters (six feet) from your basement walls;
  • Install flood-proofing devices, such as back-water valves, sump pumps, floor drains or caps, and check these items routinely to ensure they’re working properly;
  • Plant trees and other native species;
  • Consider soft-surface landscaping that allows storm water to soak into the ground rather than run directly into the local sewer systems (i.e. increased sodded areas, porous pavement).

Loss control and mitigation initiatives, as described above, are exceptionally important, especially in urban centers where losses caused by weather conditions (rain and heavy snow build up) are compounded by poor drainage infrastructure.  

Another aspect of the rising cost of claims is the increasing trend for homeowners to renovate and finish basements thereby creating more family living space. What used to be concrete flooring and walls, all easily repairable, is now lavish entertainment and living areas, complete with big-screen TV’s, hard wood floors, designer furnishings and a cost per square foot more in line with that of the rest of the home. Given these trends, water damage to basements is an obvious driver of increased water related claims costs.

The big water claim season is upon us. The snow will fall and it will melt again. The sewers aren’t all getting fixed at once. With your help, we can prepare customers with water protection tips like those listed above and maybe even prevent a few water losses this year too.

Marilyn Horrick, Personal Insurance, assistant vice president, Chubb Insurance Company of Canada.*

* The views, information and content expressed herein are those of the author and do not necessarily represent the views of Chubb Insurance Company of Canada or of any of The Chubb Group of Insurance Companies. The information provided should not be relied on as legal advice or a definitive statement of the law in any jurisdiction. For such advice, you should consult your own legal counsel.

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