According to national claims data, water leakage is a leading cause of commercial property loss from a frequency and severity standpoint.
Water damage can lead to potentially significant repair costs and business interruption.
Common causes of water damage: pipe burst and leaks, rain, overflow, sprinkler leaks, and overnight flooding.
- Costly repairs and replacement (e.g., tear down of walls to access pipes, cleanup of damaged contents, restoration of equipment, part replacement).
- Business disruption to vital business areas that store critical equipment, reducing productivity of staff
Real-life examples of water leakage include:
- Sprinkler head becomes corroded and discharges water
- Supply line to water fountain suddenly ruptures (1-inch pipe can fill a swimming pool in three hours)
- Moisture and mold damage
Why implement a water damage mitigation program?
Accidental water leakage within office and residential buildings are among the most costly and disruptive claims that property owners and businesses can experience. Accidental water releases within buildings can:
- Disrupt the business
- Affect revenue/profit and operations
- Result in increased insurance expenses in future policy terms
What owners and risk managers do to mitigate this problem:
- Start implementing self-assessments and action programs such as the 6-step program offered below.
- Be prepared for the loss before it happens. Further steps can include using leak or freeze detection, supplemented with automated shut-off valves. You may also include turning the power off, shutting off the water supply where leaks are coming from, covering up equipment that could be impacted and having emergency phone numbers in place.
- Risk Assessment – Identify at-risk areas and potential hazards. There are certain areas to avoid when setting up electrical equipment. Consider potential hazards: liquid piping located above spaces, poor sealing of floor openings, old equipment, poor condition of drains, contractor errors, etc.
- Prevention – The procedure should include making sure shut-off valves work on a regular basis, conducting periodic inspections and performing preventative maintenance. Install shut-off valves when new installations are performed. For equipment located outside, install dikes and drains around pumps and other equipment, and relocate equipment away from piping. Seal any points of penetration (use water/fire resistive material) and install leak sensors. Always have tarps available to cover equipment to protect it from water. Most importantly, continue your evaluation on an ongoing basis.
- Mitigation – Train employees to respond to all leaks and pressure changes. Prohibit contractors from using tubs and commodes as drains. Identify flow points of water into or out of the building. Establish phone lists of vendors and contractors, and post photos of shut-offs and procedures. Provide a checklist that includes where the critical equipment is located. Some vendors to have on a list include dry-down restoration company, plumbers, roofing contractors and any special equipment service vendors.
- Response – Focus on the leak or cause of the water loss, and make sure the condition stops. Contact a contractor to assess needs. If the loss is continuing to occur, take whatever measures you can cover valuable equipment. Notify your insurance carrier immediately, and start working with a local contractor on a plan of restoration. Take photos prior to cleaning. Protect any undamaged property or equipment.
- Recovery – Save broken parts that are suspected to be involved in the incident. Always be sure to test new lines, pumps and other parts for integrity.
- Post-Incident Analysis – Apply learnings to prevent recurrences or reduce number of losses. Identify your existing resources, hardware needs, and checklist to help assess key areas and levels of exposure. Review and plan: review service life of similar equipment in the building, examine loss frequency, and conduct practice runs or tabletop exercises. Train staff and offer incentives.
Water damage is nothing to joke about. Insurance plays a major role in protecting your business if water damage occurs, but hopefully, with these preventative measures, real loss and damage can be prevented. Contact us today to discuss your current insurance policy and protection options.