January 5-7, 2014, a wide swath of subzero temperatures impactedmuch of the United States, from Montana eastward to New York, andsouthward to parts of Oklahoma and northern Alabama. Several majorcities recorded their lowest temperatures in more than 20 years.Monday, January 6, 2014, ranked as the 40th coldest day on recordsince 1900, with an average temperature of 17.9 degrees for theLower 48. Minneapolis spent more than 60 consecutive hours belowzero and Chicago spent nearly 40 hours below zero. January 7, 2014set at least 49 records for daily low temperatures across thecountry. The low temperature of 4 degrees in Central Park in NewYork City was an all-time low for that date, and sections ofNiagara Falls in western New York froze over. Even normally warmcities in the South were impacted. Atlanta recorded a lowtemperature of 6 degrees on January 7.

These sub-freezing temperatures resulted in extremely highdemand for electric and gas utilities. On January 6, an estimated2,200 customers of Columbia Gas in Ohio lost natural gas service,allegedly due to low pressures and operational issues of aninterstate pipeline supplier. Unlike an interruption in electricalservice, when an interruption of gas service occurs, the gascompany cannot simply flip a switch to restore the gas service. Gassupply lines must be purged of air and repressurized. Once thatoccurs, the gas meters need to be brought on line to each and everycustomer. In addition, representatives of the local gas companiesmust go door to door to re-light gas pilots. This process can takedays, depending on the scope of the gas service interruption.

Lack of gas means lack of heat. The combination of no heat andextended subfreezing temperatures spells disaster for plumbinglines and fire sprinkler pipes. Ice forms in the systems, rupturingcopper and PVC piping, joints and fittings. When the temperaturerises above freezing and the ice thaws, water losses areinevitable.

Causes of Freeze Damage

Water expands by approximately 9 percent when it freezes.Pressure from this expansion causes pipes, fittings and valves tobreak — normally at their weakest points. Inevitably, as thetemperatures rise, the ice thaws and water begins to flow out ofthe damaged portion of the water system. It is worth noting thatfreezing generally occurs in piping where the water is stationary,and it is less likely to occur in pipes when water is flowing.

The combination of utility outages and subfreezing temperaturesof an extended duration can result in widespread freeze-relatedproperty damage claims for an insurer. What follows is a briefexplanation of some of the factors that cause pipes to freeze.

Lack of Heat: Quite often water pipes freezesimply because the structure was not kept at an adequatetemperature. Cost conscious owners are known to turn down the heatduring the winter in order to save a few dollars. Wet pipesprinkler systems are installed with the prerequisite that heat inthe building must be maintained above a certain temperature —normally 40°F. A notation to that effect can be seen on theblueprints for most wet pipe sprinkler systems.

Vacation homes and other non-occupied buildings are partiallysusceptible to lack-of-heat freeze damage as owners of thosestructures often turn the heat down as a means to save money.Similarly, when cold temperatures hit, owners of primary residencesoften close off rooms that are not used in order to save expense ofheating those areas. When the temperature drops low enough, pipesin and around those areas can freeze.

Failures of heating systems are also to blame for many freezerelated claims. Furnaces can and do fail and automatic thermostatscan also suffer from malfunctions that prevent the proper operationof a heating system. As with the case in Ohio, lack of gas supplyis also a potential cause of lack of heating and structures.

Construction Defects: Poor construction can also be to blame forfreeze related claims. Not surprisingly, codes require buildings tobe designed and built so that freezing of domestic water and sewerlines does not occur when cold weather hits. The codes do this byspecifying placement of pipes or, for pipes that cannot be placedproperly, by requiring an alternate means of keeping the pipeswarm. For example, the Uniform Plumbing Code, § 313.6 provides:

No water, soil, or waste pipe shall be installed orpermitted outside of a building or in an exterior wall unless,where necessary, adequate provision is made to protect such pipefrom freezing.

Pipes located too close to exterior walls or near roof ventshave a much higher chance of freezing. Likewise, improperly sealedopenings in attics or other air gaps in an otherwise safe locationcan eventually lead to a frozen pipe. Pipes that cannot be locatedaway from cold areas can be fitted with insulation sleeves orwrapping which slows the heat transfer. As discussed below, it isimportant to know that insulation sleeves or wrapping do not heatpipes — they simply slow heat transfer. Thus, cold temperaturesover an extended period of time will eventually transfer enoughheat away from the pipes to cause them to freeze.

Sprinkler systems have their own sets of codes that address theissues of freeze damage. NFPA 13R is titled “Standard for theInstallation of Sprinkler Systems in Residential Occupancies Up Toand Including Four Stories in Height.” § 5.4.1 of that standardstates:

A wet pipe system shall be used where piping is installed inareas that can be maintained reliably above 40°F (4°C).

Accordingly, it is incumbent that building sprinkler systems bedesigned and installed to account for how the structure will beused. Due to the nature of some buildings, heat cannot be readilymaintained above 40°F so a wet pipe system may not be the rightchoice. In this instance, dry systems should be used.

When designing dry sprinkler systems, it is important to includeproper drain points. Residual water from confidence testing or evencondensation can accumulate at low points in the piping thuscreating the possibility for freeze damage to occur. Likewise,proper drain points that are not used defeat the purpose of thedrain points entirely.

Improper Insulation: In considering whetherinsulation played a role in a freeze loss, one must first have abasic understanding of how insulation works. Insulation is designedto combat heat transfer or the movement of heat from one place toanother. As explained in the second law of thermodynamics, absentan external factor, heat transfer always occurs from a highertemperature region to a cooler temperature one. Simply put, thismeans that heat will always move from a warmer area to a colderone.

On a summer day, heat from outside your building is constantlytrying to transfer inside your home until the two temperatureslevel out. On a cold winter day, heat from inside your structure isconstantly trying to transfer outside your property until the twotemperatures level out. Similarly, when water inside plumbing iswarmer than the air surrounding the pipe, heat transfer begins tooccur in an attempt to level out the temperature differential. Thisis the inherent problem that leads to pipe freezes.

Insulation works by slowing the process of heat transfer.Insulation does not act to produce either heat or cold. Thus, thesame insulated cooler can act to keep food either colder or hotterfor a longer period of time than food that is not in the cooler.So, while insulation will not actually heat water pipes, whenproperly used, it will keep them warm longer. That said, no matterhow much insulation is around the pipes, a constant supply of heatis needed to maintain a steady temperature. If water pipes areinstalled in such a way that heat cannot reach them, the insulationwill have no effect. Many well insulated sprinkler systems sufferfreeze related damage for this very reason.

To properly insulate sprinkler pipes, provisions must be made toallow heat to reach the pipes. Too often builders in an attempt toprevent freeze damage install insulation between the pipes andtheir heat source. In such instances, the insulation can act toprevent heat from ever reaching the pipes, thus laying thegroundwork for a freeze related claim. Tenting the insulation overthe top of sprinkler pipes allows heat from below to reach thepipes, while slowing heat transfer to the cold air above the pipes.In order to realize its benefits, however, it must be installedproperly. The following diagram depicts the proper method ofinstalling an insulation tent over a sprinkler pipe (seefigure 1).

Subrogating Freeze Claims

Tough decisions must be made relative to the investigation offrozen pipe subrogation cases. The first item of business isnormally stopping the leak and beginning remediation. In doing so,however, can the potential subrogation claim be prejudiced?

Spoliation: Take comfort that stopping the leakwill not be spoliation of evidence, but rather viewed as mitigatingthe loss. Almost any action taken after a loss occurs can be“tenuously argued” as spoliation of evidence. However, common senseand developing guidelines recognize that investigating any lossrequires movement of evidence and/or alteration of the scene. Asone guidebook states, “in and of itself, such movement of evidenceor alteration of the scene should not be considered spoliation ofevidence.”¹ Contractors are usually in a hurry torestore the system to ordinary operations, and they are notconcerned with preserving the damaged evidence. The contractorsneed to be advised to preserve the evidence.

Identify and Preserve In order to preserve apotential pipe freeze subrogation claim, the first thing that needsto be done is to stop the flow of water. Thereafter, if possible,preserve the failed pipe, fitting, valve, etc., in their originalcondition. If possible, take pictures of the evidence in itsoriginal condition before emergency repairs are performed. Try toavoid altering or damaging the evidence during removal. Documenthow the evidence was removed and any observable damage. It may benecessary for evidence to be removed from the scene in order toprotect and preserve its integrity. In addition, it may benecessary to partially disassemble the evidence to determine ifthat object contributed to the loss. Steps taken to protect theevidence and to identify potential responsible parties should notbe considered spoliation of evidence.²

Consultant: Selection of an appropriateconsultant is also critical to a water or freeze loss subrogationclaim. Is a plumber necessary? A metallurgist? A mechanicalengineer? A fire protection engineer or sprinkler expert? The typeof water loss impacts expert selection, as does the loss amount.First, start with a basic investigation to identify the source ofthe water. Once the source is identified, selection of anappropriate consultant can be made. This decision, if time allows,should be made in consultation with your subrogation counsel. Becareful to advise your initial consultant not to disturb the faileddevice unless it is absolutely necessary to stop the waterintrusion.

Notice: Prompt written notice to potentiallyresponsible third parties is essential, especially with respect toutility companies and municipalities that often have strict noticerequirements. Assuming emergency repairs must be performed beforenotice is provided, make reasonable attempts to preserve the failedpipe, fittings, valves, etc., for future inspections. If theresponsible parties cannot be identified until an off-siteexamination is conducted, so be it. The idea is to take reasonablesteps to preserve the evidence, if possible, for future inspectionsby interested parties.

Document the Scene: You can never take too manyphotographs or video of a water loss. Water damage can be verydifficult at times to document photographically. Thus, takeextensive photographs (or ask the insured and/or his repaircontractor to take photographs) of the area of origin beforeemergency repairs are performed. If possible, have the insuredand/or the insured's repair contractor photograph the scene duringemergency repairs. Take photographs that depict not only the originof the loss, but also the extent and scope of damages.

Mold: Water losses also can lead to moldcomplaints. The scientifically supported health effects of moldcontinue to undergo study. The differences in human sensitivitiesto mold make quantifying any hazard difficult. An industrialhygienist or indoor air quality specialist may be needed todetermine if the existing environment is acceptable for normalhuman occupancy. Please note that mold growth occurs when spores,sufficient moisture and nutrients exist. Further, temperature playsa vital role in mold growth. Drying the area is essential to combatmold growth. A contractor who has experience in properly drying anddehumidifying property should be consulted. Make sure thecontractor has liability insurance. There is always a risk that thecontractor will make the damage worse by spreading mold in thedrying process.

By keeping the above-noted issues in mind when evaluating awater loss, you will maximize your opportunities in preserving yoursubrogation claim.

Subrogation Considerations

1. Consider retention of legal counsel to supervise the subrogationinvestigation. This will enable the adjuster to focus on immediateadjustment issues.

2. Consider immediate engagement of experts (may require hands-ontrade person, such as a sprinkler installer, plumber, fireprotection engineer, mechanical engineer, metallurgist, etc.)

3. Document the scene with photographs, the more the better, takenas soon after the occurrence as feasible.

4. To the extent possible, obtain and preserve the failed or brokenportions of the system (e.g., broken pipes, cracked valves,fittings, etc.).

5. Determine the nature and type of heating system that may havefailed or shut down and the reasons why.

6. Where tenants are involved, obtain a copy of the lease agreementto review for contractual legal obligations, exculpatory clauses,waivers of subrogation, etc.

7. Get names, dates, details and written documentation of recentwork performed by a third-party contractor as well as regular,yearly maintenance performed by fire sprinkler contractors.

8. Obtain plans and blue prints of applicable system that failed(plumbing, sprinkler, HVAC, etc.)

9. Determine the date of the installation of the system that failedand the entity responsible for the location and amount ofinsulation or protection afforded the system. This is particularlyimportant, because virtually all states have statutes of reposethat could impact your subrogation claims.

10. Obtain meteorological information. Counsel or experts can obtainU.S. weather information from local reporting stations, includingtemperatures, wind velocity and wind direction.

11. Determine the names of the last occupant prior to the discoveryof the loss and get statements from them as well as the buildingsuperintendant, plant engineer, tenants, maintenance personnel,etc., concentrating on:

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    1. Temperatures in the building;

    2. Time periods unoccupied;

    3. Time of discovery of the loss and the last time someone was inthe building prior to the loss;

    4. Details of any surveillance system, e.g., guards, sprinkleralarms, flow sensors, temperature monitors, etc.;

    5. Names and contact details of any outside supervising ormonitoring services;

    6. Prior similar occurrences;

    7. If already repaired, the names of the repairing entities, andany written documentation; and

    8. Any admissions in post-loss meetings with outside parties.

12. While the adjuster assigned to the loss will be immediatelyconcerned with establishing the scope of the loss, taking remedialmeasures to mitigate damages, and providing service to thepolicyholder, any and all of the tasks listed above can beaccomplished by subrogation counsel.

Potential Claims Arising from the January 2014Interruption in Gas Service

On January 6, 2014, North Central Ohio experienced a natural gassupply interruption that affected service to approximately 2,700Ohio homes in parts of North Ridgeville, Eaton Township, andElyria. The most likely source for the interruption was a supplyshortage arising from the gas company's regional supply network. Toproperly restore the gas, personnel from the gas company wererequired to manually shut off the gas line at individual homes.Crews were then required to re-enter each home to restore gasservice and ignite pilot lights. Logistically, this required thegas company to obtain assistance from neighboring counties andemergency services. Service was restored for approximately 80percent of homeowners by January 8, and all homeowners had serviceby January 10. The gas company reported that numerous homeownersexperienced damage from frozen pipes associated with theinterruption in service.

Other Considerations

in evaluating potential subrogation claims against generalcontractors, subcontractors, architects and design engineers,consideration must also be given to the age of the subject propertyand the last time work was performed in the area where the pipefreeze occurred. Virtually all states have statutes of repose thatbar suit filed beyond a certain amount of time after thesubstantial completion of construction.

Conclusion

The January 2014 freeze that hit the continental United Stateswill undoubtedly result in hundreds if not thousands of propertyinsurance claims. In Ohio, claims against Columbia Gas will likelybe met with vigorous defenses based upon published tariffs. Withrespect to freeze claims unrelated to gas service interruptions,traditional subrogation evaluations must be conducted.

Footnotes

¹ NFPA Guide for Fire and Explosion Investigations(2001 Ed.) § 9.3.6.6.

² Id. at §9.3.6.6.