SCINS Says Costs for Water Damage Growing Rapidly

The cost of household water damage in South Carolina continues to grow at an alarming rate, according to the South Carolina Insurance News Service (SCINS). The group said that in 2002 water claims cost the insurance industry over $36 million and accounted for 25 percent of all homeowner losses. The results continue a five-year trend of increased homeowners insurance claims costs for water damage.

Clean up costs and construction costs are largely faulted for the increase in water damage insurance losses from $31 million in 2001 to about $36 million 2002.

In its survey of water-related insurance losses, the non-profit SCINS found that insurers have paid more than $136 million in household water claims since 1998.

“The cost of water losses continued to grow unabated in 2002,” said Insurance News Service Executive Director Allison Wright. “Water is absorbing a larger and larger share of South Carolina homeowners’ insurance losses.”

Insurers attributed the increased expenses largely to the price of repair and remediation, costs that have skyrocketed as insurers try to prevent small water claims from turning into large mold losses. Other insurers polled cited the high cost of construction in a market where contractors are in great demand.

Insurers representing 60 percent of the South Carolina homeowners’ insurance market provided data for the survey.

Though the number of water-related claims—or insurance losses for damage caused by burst hoses and pipes or leaks from washing machines, icemaker connections, lavatories and other household water fittings—has varied from year to year, the cost of water damage has climbed in each of the past five years. Between 2000 and 2002, the annual cost of water claims climbed by more than $11 million.

On average, individual water claims cost surveyed insurers $3,662 in 2002, nearly double the $1,918 average water claims at the beginning of the survey period.

The survey found that water-related claims comprised one-quarter of all South Carolina homeowners insurance claims filed in 2002. Other common homeowners’ insurance claims include fire, theft, liability, wind and lightning.

Based on trends of the insurers surveyed, overall industry water losses between 1998 and 2002 could be as high as $50 million—exceeding the cost of many natural disasters in our state.

“Tens of millions of dollars are lost each year to water damage in South Carolina homes—damage that is often preventable with simple home maintenance,” Wright said. “If we took a few minutes each year to inspect our household fixtures and water pressure, we could prevent much of this damage from occurring.”

SCINS encourages homeowners to inspect their homes for water damage regularly and perform simple and inexpensive maintenance that can prevent water damage.

Stopping household water damage depends on two critical components: Knowing how and where to shut off water supplies and checking household water pressure.

It is a good idea to shut off indoor water sources during extended vacations or trips. Homeowners should also replace hoses to washing machines, icemakers, sinks and toilets every five-to-seven years to guard against leaks. Another way to help keep the costs of these claims from increasing is to report water damage claims promptly to the insurer to help reduce the extent of the damage.