water leak detection

Insurance Pop Quiz

True or False?

  1. Insurance companies love to pay out claims for water damage                               
  2. Claim payments from insurance companies is free money for you.                             
  3. You have no control over insurance company premiums.                                         
  4. Damage loss ratios are like golf – the lower the better.                                              
  5. A leak is a leak – the damage is done no matter how long it takes to fix it.               
  6. There are more insurance claims for fire damage than for water damage
  7. Building engineers will quickly know the origin of leak water found in the lobby 
  8. Water leaks will run forever if no engineers or building managers are on site.
  9. All wireless water leak detection systems are created equal.
  10. Insurance companies love to pay out claims for water damage.      

1. False: Ok, that was an easy one. Insurance companies are in business to turn a profit just like you. Paying claims diminishes profits and company value because in many cases the amount of the claims is far higher than the premiums you paid in.

2. Claim payments from insurance companies is ‘free’ money for you.

False: Money paid out in claims to you will be recouped in the form of increased future premiums. Warren Buffet’s formula is said to recover claim payouts from their clients over the following three years through premium increases.

3. You have some control over insurance company premium increases for your building.

True: You don’t have total control over increases, as many premium increases are not the result of direct property losses, but a result of claims the insurance company pays out in total, e.g., floods, wildfires and hurricanes all trigger enormous claim payouts which will be offset by premium increases across the carrier’s entire customer base. However, adhering to your insurance company’s risk management policies, following best practices that meet Underwriting Desirability Metrics, such as thorough property maintenance and complying with updated carrier Risk Management Policies and installing wireless sensors, like the Trident system for water leaks will all help you minimize damage losses and therefore premium increases.

4. Damage Loss Ratios are like golf scores – the lower the better.

True: Damage Loss Ratios are a reflection of the premiums paid against claims made in percentage terms.  If you paid $1,000 in premiums and had claims of $100 your loss ratio would be 10%, a very acceptable number.  If your claims were $750 then the loss ratio would be 75% and could lead over time to premium increases, higher deductibles, difficult exclusions or even policy cancellation.

5. A leak is a leak – the damage is done no matter when you find it.

False:  If only that were true. Time is money when it comes to fixing a leak. The volume of water from a leak in a 2” pipe can start as a trickle and under average pressure could escalate to produce over 7,000 gallons in an hour if the pipe breaks. Clearly damage costs increase geometrically because the leak may not be contained in one area or on just one floor. The FM Approved Trident wireless water leak detection system is designed to notify you immediately of any leaks so they can be fixed quickly.

6. There are more insurance claims for fire damage than for water damage.

False:  Commercial water damage insurance claims are far more frequent than claims because of fire and are the leading cause of loss in terms of frequency of physical damage claims to the building. Every building has smoke detectors installed to sound an alert at the first hint of fire. Think of the Trident water leak detection system as a ‘smoke detector’ for water.

7. Engineers know their buildings so well they can quickly find the origin of leak water. 

False:  If that were true, the damage losses from water leaks could be reduced dramatically. Gravity is not your friend when it comes to water leaks. It could take hours to find the origin of a leak that has seeped down through several occupied floors. Unless, of course, you have installed Trident wireless sensors. Trident will tell you precisely on what floor and in what room the leak originated.

8. Water leaks will run forever if no engineers or building managers are on site to fix them.

True: Unless you have installed the Trident water leak detection system which provides an option to incorporate an automatic shutoff valve that will stop the flow of water automatically as soon as the sensor detects the leak. From an insurance company’s perspective, that lowers claim frequency and reduces the severity of damage losses. And tenants have the peace of mind that their office equipment, furniture, and assorted property is much less likely to be impacted. 

9. All wireless water leak detection systems are created equal..

False: Only one wireless water leak detection system has received FM Approval as best-in-class, and that is the Trident system. When you see a product or service with the FM APPROVED mark, you will know it meets FM’s high property loss prevention product testing and certification standards and you’ll prevent more losses.

10. The average claim for water damage losses is $90,000.

True: Data from several insurance carriers indicates that the average claim for a water damage event is $90,000, which depending on the size of your building, could be more than the cost of a Trident wireless leak detection system that will protect you for years. We have heard of claims in excess of $8,000,000 when very expensive tenant equipment and belongings have been damaged, so don’t count on the fact that you will be lower than the average. And every building will experience water damage at some point.