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.

• Chubb Personal Risk Services
• PURE Insurance

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.

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.