Water damage claims: How to mitigate your risks


water damage claims - how to avoid


Each year businesses file water damage claims and spend billions of dollars trying to recover from losses caused by water damage. Even small leaks can lead to costly damages, and leakages can happen at any time of year. Here’s how to make sure your tribal enterprise doesn’t become one of those figures.


About water damage claims


Types of water

Water damage is frequently caused by the following sources: natural water, grey water or service water. It is important to make provisions for all kinds of water sources by prevention through regular maintenance and inspection.

Natural Water, such as rain, can frequently enter a building through the roof, either through faulty design or poor maintenance. Design flaws or neglected areas that require maintenance can form areas where water can collect and pool, resulting in seepage and roof leaks over time, especially during periods of persistent precipitation. If the gutter system has been neglected, any blockages can cause water to back up and overflow, escaping back into the building. And even the best-designed or well-maintained roofs can fail under the rigors of intense storms or severe seasonal weather patterns.

Grey Water is water runoff from appliances such as baths, sinks, washing machines, dishwashers, and other kitchen appliances. Most commercial buildings contain systems that handle grey water. The more sophisticated a system, the greater potential for error or failure and subsequent water damage claims if not installed or maintained properly. Additionally, since these systems are not usually in constant use, they tend to present intermittent leaks when there is a failure, which can slowly build up over time and be more difficult to detect.

Service Water often exists in order to make large volumes of water readily available for various service functions, like fire suppression systems. Any leaks in these systems can cause swift and severe water loss, especially if the affected system is located on the roof, or in the top floor of a multi-story building. Other potential issues include:

  • The feed sources of municipal water supplies require proper maintenance.
  • If there is a loss of water, faucets and other access points can accidentally be left in the open position.
  • Unoccupied buildings are prone to freezing and burst pipes if the proper care is not taken.
  • Some water supplies contain minerals that are corrosive to equipment over time.


Related: Tribal Businesses: Steps to Creating an Effective Loss Control Program


Vulnerable Buildings

There are certain factors that have shown themselves to make a building more susceptible to water damage and subsequent water damage claims:

Age. Buildings that are over 20 years old generally tend to have a higher risk of water damage, due to the wear and tear it has experienced in both its internal and external infrastructure. Older piping and water systems are also more prone to failure.

Materials. Sometimes younger buildings can also experience this risk, especially if they were built with more modern or experimental materials. Traditional materials have been tested by time and are often installed to certain standards that may not be in existence for newer kinds of materials. Newer materials may also be at higher risk for certain types of damage for which traditional best practices haven’t been able to take into account.

Architecture. In a high rise with multiple floors and units, such as an apartment complex, each unit has its own water systems, introducing many more areas of potential leakage or system failure. If even one unit’s water system should fail, the damage will not necessarily remain localized to that unit, but is very capable of spreading and damaging many other units, compounding damages.

Weather and Region. The area in which a building resides can also be a factor, because different regions subject buildings to different weather factors. In some cases, either seasonal extremes or geographical risks must be taken into extra consideration in order to prevent damage.

Maintenance. Buildings that have had their regular roof or HVAC maintenance (such as roof, plumbing or HVAC) deferred face greater risks of loss through water damage, increasing the probability of water damage claims. While maintenance deferrals are sometimes inevitable, efforts should be made to provide the required maintenance as soon as reasonably possible. There is no better defense against preventable claims than a commitment to disciplined building maintenance.


Water damage mitigation programs

 Now that many of the potential scenarios and causes of loss have been discussed, it’s time to think about what to do in order to prevent and mitigate water damages. If not considered well in advance, it can be hard to cope with and mitigate a water damage event once it has occurred.

Developing a mitigation program analyzes a specific building’s structure, weak points and the organization’s preferred methods of clean up and restoration. Additionally, each building should have its own set of regularly performed checklists to ensure that systems are frequently inspected for potential wear and damage. Each building will have its own unique needs, but some sample checklist items could include:

  • Provisions are in place to repair small leaks promptly.
  • All leaks are analyzed to determine if it is a fluke or a system failure.
  • Housekeeping staff is trained to notify maintenance personnel promptly when certain damage is found (leaks, drips, clogged drains, etc.).
  • Work on water systems performed by contractors is monitored and inspected.
  • Liquid storage tanks and vessels are regularly inspected, and procedures are in place to mitigate leaks and failures.
  • Pipe diagrams are current and show all valves for all water systems.
  • Shut-off valves are exercised at least annually by being closed, opened, and lubricated if necessary, to be sure they are able to be closed easily during a water damage event.
  • Protocol is in place to have someone is available on all shifts who is trained to respond immediately to any leak.
  • Protocol is in place to have someone available 24/7 with authorization to call approved professional restoration services.


Related: Preventing ice dams at your business property


In addition, making the following suggestions part of your building’s procedures is an excellent way to mitigate risk:

  • Make sure your critical equipment or materials (such as valuable papers) are placed or stored in such a way as to protect them in case of a water damage event.
  • Inspect roof, flashing, drains, downspouts, and roof-mounted equipment at least twice a year, and especially after major weather events.
  • Create a systematic maintenance schedule to avoid excessive wear and tear on systems (and to identify any potential system failures before they cause water damage claims).
  • Supervise new construction or renovations to be sure that current water systems are not compromised, and that your policies and procedures remain sufficient.


Related: How reporting a tribal business claim promptly saves you money in the long run


Above all, be sure your water damage mitigation plan addresses all of the four following items:


What your organization does in order to prevent water damage from occurring, such as checklists, procedures, inspections, staff training, etc.


Steps your organization has taken to be sure that they are ready to respond if a water damage claim does occur: identifying and maintaining water shut off points, having clean up supplies accessible, and so on.


How your employees are trained to respond to a water damage incident such as notification procedures, damage mitigation, clean up priorities, etc.


Steps for documenting damage, response efforts, and working with restoration companies and insurance carriers to ensure your organization can reestablish operations as soon as possible.

For additional ideas or risk management advice for developing water damage mitigation plans, contact your broker or Mark Sherwood at msherwood@chooseclear.com or 800.407.2027. There are also additional checklists and risk management materials regarding water damage available on the Tribal My Risk Solutions website, www.tribal.myrisksolutions.com.



Information obtained from Zurich Insurance Group.