Courtesy of iii.org
Pop Quiz: What Is One Of The Most Common Types Of Home Insurance Claims? (Hint: it's not fire.)
It's water damage. This is perhaps not surprising – it rains a lot in many places. But what may surprise you is that things like pipe bursts and broken appliances are increasingly the main causes of water damage in homes.
On the insurance side, these are called "non-weather damage to water." It is worrying that these claims happen more often and become much more expensive. A Best & # 39 ;s Review article reports that the average household's water damage claim is now over $ 6,700. Major losses (over $ 500,000) have doubled in number over the past three years. Non-weather damage now costs insurance companies (and their policyholders) billions in losses each year.
This happens for several reasons. Our housing stock is aging, as is our infrastructure. More houses are being built and they are getting bigger ̵
But the worst thing is that many – if not most – claims of water damage can be prevented. Inspection of pipes or routine maintenance can go a long way. This is where the Internet of Things (IoT) comes in. Smart devices and connected sensors installed on pipes can detect leaks before they occur or before they cause too much damage. They are basically smoke detectors, but for water.
And they work. Best & # 39 ;s Review noted that installation of IoT devices can reduce water losses by up to 93 percent .
Review quoted the CEO of an IoT company as claiming that leak detection devices can save insurers and their customers $ 10 billion dollars every year .
Admittedly, homeowners have been slow to install IoTs to detect leaks. But insurers are hopeful of raising awareness of the problem, offering policyholder incentives such as premium rebates and encouraging IoT installation during housing construction to begin to reverse.
Update: Of interest, Washington passed a 2018 rule specifically mentioning water monitors and water shut-off systems as permitted tools for an insurer's risk mitigation program.