I’m a coastal agent who insures a lot of secondary homes. At my agency, I have been watching water-damage claims closely for years. When our area gets a deep freeze, we do have a fair number of large claims due to water damage. However, weather is only a part of water-damage claims.
Year in and year out, we see clients who experience water damage from a variety of causes, from the washer leaking, to a toilet or dishwasher malfunctioning, or when the water line disconnects from the refrigerator.
At our agency, water-damage claims are near the top property loss in terms of a claim payout. According to the Insurance Information Institute we are not alone. In terms of frequency, water damage and freezing ranks second for claims; its falls behind top-ranked wind and hail. Water damage also ranks second for average claim payout at $11,098—its payout average amount is only beaten by fire and lighting claims.
Technology can help
We hear a lot about how InsurTech—a broad term used for technology helping the industry and customer experience—is taking over the industry as disrupters and threats to the independent agency channel. However, it does have its place in the insurance industry.
One of my agency’s favorite InsurTech devices is the water-leak detector system. By now, we have all heard about them. When the system detects a leak, the device closes the valve attached to the main water line to the house.
When we recommend this system to our clients, if they baulk at the expense and usefulness of it, we remind them that, now that they are readily available, one of these systems can be installed for less than $1,000 and that from 2015-19 water-damage claims accounted for more than 20% of the claims in four of the five years, according to the I.I.I.
A chance for education
This is a great opportunity for agents to help educate our customers and help them prevent an avoidable claim. Water-leak detection systems also can help lower a water bill by locating a small leak or a running toilet. This can help save the customer some money and help save the environment!
To help our clients further, at our agency, we work with some of our carriers that are willing to offer a discount on a homeowners insurance policy if the house has a water-leak detection system. And, while the carriers that offer this discount are in the minority, there’s always hope for the future.
An evolving industry
A decade ago, there were a couple companies that made automatic shutoff devices. Today, there at least a dozen companies in the market—including a company that was purchased by a national plumbing brand.
This technology is becoming mainstream, and it will allow agents to show off their risk-management skills by teaching their customers about the value of a water-leak detector system.