2007 Issue 7

Risk Management, Loss Control, & Claim Prevention: Water Loss

By Rich Bouvier

There is never a bad time to remind ourselves of simple steps, actions, and signs of potential sources of claims around our condominium associations.  Many large claims that associations experience can be prevented.  Some of the “acts of God” weather related losses can also be prevented or at least have their severity reduced.
           
Water losses have potential to be costly and difficult to predict.  Common sources of water loss include corroded hot water tanks, burst washing machine hoses, split automatic ice maker feed lines, burst pipes due to extremely cold weather.  Some water losses will strike without any warning also – these unpredictable pipe bursts should be looked at closely to determine if there is potential for more to occur in other units due to defective materials, improper insulation or poor craftsmanship.

We will always recommend that associations send out reminders to unit owners to replace hot water tanks once their useful life has been exhausted.  Furthermore, the use of a catch pan with the new tank may turn a costly water loss into a smaller manageable claim with minimal increase installation costs.  I think it’s safe to say that unit owners and boards of directors rarely know the date that each hot water tank was installed.  Mark the replacement date clearly on the hot water tank – even if it’s a best guess estimate.  Having an approximate date is better than no age indicated.  Should the unit change ownership, the new owners will have the appropriate information to make a decision to replace the tank under their ownership.  The recommended replacement age is every 8-10 years, but this can vary according to the water chemistry of your locality.

Steel wrapped washing machine hoses are inexpensive and easy to install.  This is one quick and painless way to actively prevent water loss.  Furthermore, while not in use, turn off the water supply valve to the washing machine.  Regularly reminding unit owners of these actions is a good practice in community life.

Some of the most costly water losses originate from burst pipes due to freezing.  This is one of the more difficult claims to predict and prevent.  To start, a reminder notice to all unit owners to maintain heat at a minimum of 55 degrees while they are away or traveling is a good start, but what if they have electrical heat and a major circuit breaker trips or what do you do if there a major power outage during a cold spell?  Keeping the heat on is step one, step two is to keep the water flowing – both the cold and the warm water feeds.  Having water drip every few seconds will keep the water moving and may prevent ice crystals from forming.  Lastly, if you have unit owners that regularly leave their units for extended periods of time, suggest that they hire a house sitter to monitor the heat and to run water in the toilets and sinks.

What about weather related water losses and flooding?  Throughout the course of the year, it’s relatively easy to identify areas of the association where rain water has a tendency to accumulate and areas where the ground remains saturated long after the rains have stopped.  Changes in landscaping and the installation of water collection basins in troubled areas may be an easy way to prevent a loss from severe rains.  Make sure that the storm drains are clean and free from debris too.
           
Lastly I’d like to mention flood insurance.  Ever since Hurricane Katrina, the US Government has been working on updating flood zones and flood hazard areas.  Rarely would associations know if they have been reassigned to a higher risk flood zone unless they directly inquired to the town offices for flood zone information.  We see that most associations find themselves in a new flood zone when a unit is up for sale or a refinance and the lender requires proof of flood insurance.  After seeing the major flooding that occurred from Hurricane Katrina and what just happened in the Midwest this summer – flooding always surprises people.  Coverage exists and is available.  CT has an enormous coastal exposure and the potential for a major hurricane always exists.

While prevention is the best medicine, it’s not always possible.  The simple suggestions mentioned above may help associations get a grip on loss control and to manage risks.  If you ever are concerned about what your master insurance policies cover and more importantly, what is not covered, a quick call to your agent is all that is needed to shed light on coverage deficiencies.

Rich Bouvier is with Bouvier, Beckwith & Lennox, LLC Insurance.  He currently serves as Chairperson of the CAI-CT Golf Committee.