COLUMN: No great escape from flood claims
If the past few years are anything to go by, it is likely severe flooding will affect parts of the UK this winter.
It will be headline news with the usual stories about the availability (or the lack of) flood insurance, especially for small businesses.It could be catastrophic to those flooded, but insurers will only be concerned if large areas are affected, particularly now most domestic claims are reinsured via the Flood Re Scheme. However, as winter approaches, they will be concerned about the onset of the most common type of water damage claims – burst pipes, or as it is now termed in insurance policies, escape of water. The Association of British Insurers says its members pay out Â£2.5m every day for escape-of-water claims, just on domestic policies, and they account for more than one1 in five of all property damage claims, the largest single cause of damage. It is not just the frequency: escape of water claims can be very expensive. Not only can a small amount of water do a lot of damage, you have to find the leak, (which may be under floors or behind a wall) and it may have been leaking for months.Freezing and subsequent bursting of pipes is the most common, but not the only cause. Pipes get blocked or corrode and we have also seen numerous disasters caused by DIY or cowboy plumbers, with the odd ‘humorous’ examples of forgetting to turn off taps or reconnect joints before refilling systems. The use of faulty materials, especially cheap imported plastic push-fit connectors (some with fake CE marks) hasn’t helped, but even professional firms sometimes have problems. A finished system may have been successfully tested, but the pressure in water systems will find weaknesses over time and with the forensics available to insurers, for expensive claims the culprit is often found out.Water (or other fluids such as oil) damage to property will only be part of the cost to insurers. Finding the leak may involve damaging flooring or walls, then there’s cleaning up and drying out, checking electrical systems; and if the building is not habitable either business interruption or alternative accommodation for domestic properties can be issues. There may also be a loss of metered water.Most problems with claims involve either the finding the leak, the cause or the length of time before it’s discovered.Policies generally provide ‘trace and access’ cover for the cost of damage done to flooring, tiles etc, but some only provide cover when the cause, once found, is due to an insured peril and difficulties arise if they feel it is due to wear and tear. Also, trace and access is often limited to where subsequent damage has occurred, which may not have happened with external drainage leaks and blockages.Other problems include compliance with unoccupancy conditions (either to keep heating on or drain systems) and the time taken for repairs to be carried out, though the drying out process can be very long.Many escape of water claims are avoidable if systems are checked, maintained and properly lagged. Make sure you are aware of policy conditions relating to unoccupancy or storage of stock or equipment susceptible to water damage and if you are unfortunate to suffer a loss where trace and access is involved, make sure you take photos or get a plumbers’ report before it is covered up.