After robbing a home, they plugged up the kitchen sink with a towel and
turned on the faucet and left it running. The result was a flooded house and
significant damage. The unlucky home owners came home to massive damage from
the water and their prized possessions gone. This "calling card" was
what gave them their name, "The Wet Bandits."
Remembering the films we love is great, but this particular film is being
highlighted because of the type of damage The Wet Bandits caused when they
plugged up the sinks in their victims' homes. This type of damage is also
known as nonweather-related water damage.
Technology Enabled Defenses for the Home
Back then, when Home Alone was made, the technology we have today
was not available. If it was, the damage caused by the water overflowing from
the sink would have been significantly less. Today, machine learning and
artificial intelligence are being used to close the main water valve in a house
when a leak or unusual water flow occurs. If a Wet Bandit's victim had one
of these devices in their home, it would have automatically closed the
house's main water valve once it identified the unusual water usage.
These devices are also able to send out notifications by phone, text, and
email to alert the home owner of the situation. This would have saved the home
owner from having to go through a painful cleanup and repair process, and quite
possibly would have helped apprehend "The Wet Bandits."
Automatic Water Shutoff Valves
These devices are called automatic water shutoff valves, and they have been
around for more than a decade. According to reports, once a Wi-Fi enabled
automatic water shutoff device is installed in a home, the home owner is 93
percent less likely to sustain a serious and costly water loss.
Nonweather-Related Water Damage Is a Huge Problem
Nonweather-related water damage is the second-leading cause of home
owners' claims according to industry reports. The most common cause of
nonweather-related water damage claims is frozen pipes that burst and release
water into a home. If a leak happens when someone is home, it can be caught and
mitigated quickly. However, leaks that go undetected for an extended period of
time can cause significant damage to a home. The average cost of recovering
from a water loss is around $6,000, but losses can be much higher than that
depending on the home or condominium.
Insurance companies are facing massive losses from nonweather-related water
claims. In 2018, Aviva paid out $164 million in water damage claims from
January to September, and Chubb reported a rise in nonweather-related water
losses during the third quarter of 2018. Chubb also reports that, over the past
2 years, more than half of US home owners have experienced a water leak claim
that generated $5,000 or more in cleanup and repair costs. The problem stems
mostly from frozen pipe leaks and failures, faulty plumbing, sewer backups, and
broken appliance water lines.
The result is home owners having to find substitute living while their home
is being repaired. They have to deal with a major interruption in their
lifestyle and potentially pay out of pocket for costly repairs. Insurers are
paying enormous sums to handle their insured's claims, and homeowners
insurance rates are increasing to offset the losses.
The good news is nonweather-related water losses are preventable thanks to
technology advances and the advent of connected devices.
Risk Scenarios To Be Aware of
Losses can happen to any home at any time, but there are certain situations
and lifestyle triggers that increase the likelihood of a loss of this type. A
few examples of scenarios where the risk of loss is increased are the
following.
- Leaving on vacation—Whether a home is left unoccupied
for 24 hours, a week, or more, if a leak occurs when no one is around to
handle it, the damage is magnified.
- Owning a second home—People who own a second home or
multiple homes have a very high risk of experiencing a water loss. This is
due to the fact that the home is unoccupied much of the time, and heating a
house is temperamental and fraught with pitfalls, such as forgetting to fill
the heating oil tank.
- Leaky faucets/toilets—Faucets and toilets have a
tendency to leak, and those leaks can easily go unnoticed for long periods of
time. Although these leaks may not cause property damage to a home, they can
cause irreversible damage to a septic system by inundating the system with
water and thereby reducing the useful life of the system. Every septic system
has a shelf life, and increasing the hydraulic load with water leaks will
reduce that shelf life and end up forcing the home owner to replace the
system prematurely, at great cost.
Insurance Companies Are Working To Thwart Water Damage
Insurance companies are working to raise awareness about the
nonweather-related water losses and how automatic water shutoff valves can help
prevent them. One way they are doing this is by partnering with device
manufacturers such as Sentinel Hydrosolutions LLC, FloLogic, Inc., Flo
Technologies, Inc. (Flo by Moen), and GROHE Sense Guard. These partnerships are
being developed to bring exclusive discounts to the insurance company's
insureds, to tap into the device manufacturer's distribution and
installation expertise, and develop research and marketing content to help
increase the adoption of these devices.
The following are two examples of websites developed by insurers to help
raise awareness.
Coverage To Prevent Losses
Another way some insurers are working to prevent losses is by including
coverage for the installation of an automatic water shutoff valve in their
policies. They are doing this because their data shows a home that has
experienced one water loss is likely to experience another one.
There are some qualifications to this coverage, such as coverage is
triggered by a loss/claim, the loss has to exceed $10,000, and the coverage is
designed to pay for the labor to install a device, not to pay for the actual
device.
Significant Premium Discounts
The last way insurers are raising awareness is by offering significant
discounts on insurance premiums to insureds who install one of these devices.
Percentage discounts being offered by companies like AIG Private Client Group,
Berkley One, Chubb Personal Risk Services, Cincinnati Insurance, and PURE
Insurance range from 3 to 12 percent. The higher discounts are applied to
devices that include a link to a central station monitoring company.
Insurance Agents Are Key to Water Shutoff Device Proliferation
Many insurance agents across the country have embraced automatic water
shutoff valve devices not only as a way to help their clients prevent losses
but also as a way to mitigate premium costs. They recognize their clients are
generally aware of the benefits of having a centrally monitored alarm system
that can detect fire, unlawful home intrusion, and unusually low temperatures
and see these devices as another critical component of a home owner's loss
prevention plan.
In addition to simply recommending clients install these devices during the
home purchase or policy renewal process, agents are partnering with local
plumbers and property management firms to enable a streamlined customer
experience for the purchase and installation process. These types of
partnerships are breaking down the barriers of implementation that might
otherwise impede the installation of a device.
Automatic Water Shutoff Device Comparison
As with any product, there are varying features offered by each
manufacturer. Here is a quick overview of some of the features available from
several device manufacturers.
Manufacturer/ Feature |
FloLogic |
Flo Technologies, Inc. (Flo by
Moen) |
GROHE Sense Guard |
Leak Defense
Systems |
Phyn Plus |
Measures Water Flow |
Yes |
Yes |
Yes |
Yes |
Yes |
Measures Water Temperature |
No |
Yes |
Yes |
No |
Yes |
Invasive (Requires Pipe Cut) |
Yes |
Yes |
Yes |
Yes |
Yes |
Connect to Centrally Monitored Alarm System |
Yes |
No |
No |
Yes |
No |
AC Power |
Yes |
Yes |
Yes |
Yes |
Yes |
Battery Backup |
7 days |
No |
No |
No |
No |
Main Water Pipe Size |
up to 2 inches |
up to 1-1/4 inches |
1 inch |
up to 3 inches |
up to 1-1/4 inches |
AC Power |
Yes |
Yes |
Yes |
Yes |
Yes |
Base Price |
$1,795 |
$499 |
$500 |
$2,299 |
$850 |
Internet Connectivity |
Yes |
Yes |
Yes |
Yes |
Yes |
Phone Application/Remote Control |
Yes (+$170) |
Yes |
Yes |
Yes |
Yes |
Install Indoor and Outdoor |
Yes |
Yes |
No |
No |
Yes |
Personal Risk Management
In the world of personal risk management, we look for strategies to predict
and prevent losses in addition to recommending solutions to transfer the risk
of financial loss to an insurance company. Nonweather-related water losses
represent a substantial risk for home owners and insurers, but they are losses
that can be prevented or minimized through the installation of an automatic
water shutoff valve.
Next Steps
Insureds can speak with their independent insurance agent to learn more
about these devices and any discounts they may be eligible for. Agents can work
with local plumbers and property managers to design efficient customer
experiences for insureds wanting to install these devices. Insurance companies
can continue to partner with device manufacturers, agents, and insureds to
raise the awareness about nonweather-related water damage and how it can be
prevented.
As awareness continues to expand, we can be certain that the time and money
spent to battle this problem will be well worth the investment.
References
Lori Chordas, "Plugging the
Leaks," Best's Review, December 2018.
"Water
Damage: What's Covered; What's Not," Insurance Information
Institute, November 18, 2009.