Burst pipes and water leaks, often referred to as ‘escape of water’ by the insurance market, caused annual insurable losses of £989,500,000 in 2019 and 2020. The bulk of these were in domestic/residential property claims, which average £1.8 million per day, according to The Association of British Insurers (ABI). For some, the actual losses would be higher than this as many of the losses would be below the insurance deductible amount. Also, it does not account for economic losses such as loss of rent, business disruption, and potential liability costs for the property owner from tenants where their business or residential accommodation is disrupted.
This is in line with Marsh’s observations where for example in the residential property area, around 70% of claims and 70% of the total claim amount is due to issues associated with the escape of water. The various insurance markets have also observed that this type of loss is either their most costly and most frequent loss or at least in their top three of all claims.
Losses attributed to escape of water have increased over recent years; this has been driven by the number of — and increasing heights of — apartment buildings. Also contributing is the increase in the ratio of bathrooms to bedrooms; the increased number of water-using appliances; increase in the amount of water used per head of population; and vulnerability to water damage of some modern methods of construction, such as modular builds, bathroom / kitchen pods, and mass timber construction.
From a building/property built environment perspective, there can be several causes to water leaks, including:
- frozen pipes
- taps being left on
- poor or failed pipe fittings
- valve failures (such as water tank ball cock valves)
- incorrect or poor installations
- defective pipe elements
- leaking appliances (such as dishwasher or washing machine)
- overflowing sinks
- blocked pipes (such as blocked toilets, sinks)
- corrosion of pipework
From a construction perspective, Marsh has observed escape of water issues typically within the first six months post-handover or commissioning of a building, where failed fittings or piping elements have been the main cause of the claim for both commercial and residential builds.
Risk Considerations
There are several risk controls and considerations when looking to minimise the risk and in turn financial and business interruption losses.
Minimising Losses during the Design and Construction Phase
- Maximise use of single pipe runs where possible and minimise use of fittings and flexible pipe work (where possible utilise steel braided flexible hoses).
- For complex water systems, consider the ability to isolate each floor, system or appliance.
- Utilise appropriately certified vendors/suppliers/contractors that have established, formalised and auditable quality assurance (QA) processes. For UK properties, products should meet the Water Supply (Water Fittings) Regulations and approved installers listed in WaterRegsUK.
- Ensure mains stop valves are labelled, easily identifiable, and accessible.
- Ensure that the building design does not have water tanks or pipework (especially valves and fittings) over high value or unique items, contents, equipment and server, communications, network, electrical rooms and that these items or areas are not located in lower lying / basement areas, where possible.
- Consider in the design and installation that all electrical equipment and any items/goods to be potentially stored that are susceptible to water ingress, are raised at least 100mm from the floor.
- Consider the installation of active monitoring and response systems. Installing leak detection systems at the construction phase significantly reduces cost compared retrospective installation with prevention and hence, mitigation of catastrophic losses.
- Monitored water leak and/or flow detection system – including remote monitoring and alerting via a building management system (BMS) and/or mobile phone;
- Automatic water shutoff system.
Minimising Losses in the Built/Operational Environment
- Ensure a formalised preventative maintenance and inspection programme is established including assessing the condition of and quality of the piping installation, tank/cylinder condition, seals around showers, sinks and baths, blocked pipes and joints, gutters and downpipes, exercising shutoff/stop valves, and annual testing of backflow protection valves (in accordance with Water Suppliers’ Approved Installation Method AIM-08-01 in the UK).
- Provide training and awareness to personnel, contract staff, tenants, residents on key risk drivers such as leaking appliances, tanks, overflowing sinks and blocked pipes, and to how to mitigate these risks – reporting leaks, know location of shutoff valves, use of steel braided flexible hoses for appliances (such as dishwashers, washing machines).
- Ensure mains stop valves are labelled, easily identifiable, and accessible.
- Ensure ‘at risk’ water pipes (such as in weather exposed areas) are appropriately lagged or heat traced to prevent freezing.
- Locate high value or unique items, contents, equipment and server, communications, network, electrical rooms away from any overhead water tanks or pipework (especially valves and fittings).
- Where possible, consider raising all electrical equipment and any items/goods stored that are susceptible to water ingress, at least 100mm from the floor.
- For complex water systems, consider the installation of isolation valves to isolate each floor, system or appliance, if not already provided.
- For properties that are empty or a vacated for an extended period, consider isolating and draining the water supply or ensure heating to the property is maintained to at least 10 degrees Celsius to prevent freezing and burst pipes.
- Establish a formalised emergency response plan that incorporates actions to minimise property damage. All relevant personnel should be formally trained on the plan and the plan exercised on an at least annual basis.
- Maintain a spill response cart including current piping diagram and stop valve locations, plastic/nylon tarpaulins, bags to dispose of wet items, water removal equipment (commercial-grade wet vacuums, mops, buckets), portable pumps and hoses, adsorbent materials for drying, pipe clamps, dehumidifiers, boots, and portable dikes for diverting surface water away.
- Consider the installation of active monitoring and response systems.
- Monitored water leak and/or flow detection system – including remote monitoring and alerting via a building management system (BMS) and/or mobile phone;
- Automatic water shutoff system.
Final Consideration
Given the various types of commercial and residential builds, organisations should consult with their advisers during the concept design stage of a project and for those property owners with a current suite of operational property.
