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HANDBOOK
WATER LEAKS
Turning off the claims spigot
How insurers are using water leak detection systems to help protect consumers
B Y G R A H A M J A R V I S , Freelance Business and Technology Journalist
Water leaks are a big reason why claims and premiums costs have been increasing in Canadian property lines.
Aviva Canada reports that it typically receives 3,500 business and personal water leak claims each year; most leaks emanate from potable water systems such as kitchen sinks, toilets, water heaters, fan coil units and other sys- tems that use water. This makes water leaks the leading cause of insurance claims in the country, says a company spokesperson. “An average water dam- ageclaimcostsapproximately$20,000 in both personal and commercial busi- ness lines, but we’ve seen claims in ex- cess of $1.5 million.”
It is commonly observed in the Cana- dian property and casualty industry that “water has become the new fire,” mean- ing that the number of insurance claims due to water damage has surpassed the number of fire claims. “The country has a cold climate, and many of the water leak claims are driven through freezing pipes,” says Colin Robertson, vice presi- dent of operations and risk control at Ec- clesiastical Insurance Office plc. “Eccle- siastical is a relatively small commercial niche environment, and we see water leak claims for retirement care environ- ments through pipe-leaking and taps being left running, etc.” In contrast to Ecclesiastical U.K., the focus of the firm in Canada is on commercial insurance.
Different systems
There are two types of water leak detec- tion systems.
Passive ones produce an audible alarm or use a light indicator whenever a leak is detected. They notify someone about the leak via app, email, or by send- ing a text message to a mobile device.
Active systems detect the water leaks, alert someone, and then shut down the main water supply within seconds to prevent significant damage to property. Aviva recommends active water leak detection systems because they enable apropertyownerormanagertoinvesti- gate the leak to prevent any flooding or serious water damage from occurring. Many water leak detection systems also
canadianunderwriter.ca | September 2019 51