Water damage results in severe losses for commercial insureds

Nearly 2,700 water damage claims were registered in North America last year, mostly as a result of a bursting or leaking water pipe. (Photo: Steve Cukrov/Shutterstock)

First comes the frost, then the burst pipe. Despite preventive measures, tap water continues to pose high risks for companies. North American insurers had losses totaling more than $2 billion over the past ten years, according to a study of tap water claims since 2010 in which Allianz Global Corporate & Specialty (AGCS) has been involved. On average, water damage costs around $24,000. In 2020 alone, nearly 2,700 water damage claims were registered in North America, mostly as a result of a bursting or leaking water pipe. The highest individual damage amounts to almost $5 million.

Defective pipes are a major cause of structural damage and are also a recurring complaint in existing buildings. They occur in many types of construction projects and buildings and affect small and large projects alike. Much water damage results from leaks in pressurized drinking water or fire water systems, which often go unnoticed because the release occurs over the weekends or at times when no personnel are present.