Author: Nancy Germond 

Let's talk about plumbing. I know it's not the most exciting topic, but if your agency's profits and your insureds' lives turn upside down from water damage claims, a little education can put a plug in many typical water leaks. In this article, we'll cover the following.

• Insurance coverage for water damage and backups
• Plumbing 101 – Why most water damage occurs
• Costs associated with water damage claims
• Preventative tips to prevent water damage in homes and businesses

Coverage

There is generally coverage under most Insurance Services Office (ISO) forms for the following.

• Accidental discharge of water from household appliances, baths, plumbing fixtures, etc.
• Cracking/splitting of water systems, including water heaters, radiators, steam boilers, and pipes
• Freezing, if the insured kept heat on or drained the plumbing systems and appliances

Policies generally do not cover sumps, sump pumps or related equipment, roof drains, gutters, downspouts, or similar fixtures or equipment.

A word of warning for those of you writing plumbing contractors. If they work on a gas appliance and the homeowners become ill from fumes, most carriers defend under a pollution exclusion reservation of rights or deny outright. Also, we see in the future that pipe relining of sewer and stormwater pipes can cause pollution issues as residents may complain of illness once plumbers reline their lines. Many plumbers I've spoken are dismissive of this exposure. However, I can foresee problems in the future with pipe relines.

For all your plumbing clients, offer pollution liability insurance and if they refuse, send a coverage declination form for their signature. Document this attempt to secure a declination in your agency management system, or via an email saved to your system.

Plumbing 101

Let's review some basic plumbing facts.

§  Plumbing systems in residential construction use four networks of pipes

• The first two carry hot and cold water to faucets and appliances
• The third network is drainpipes that carry away wastewater through the main soil waste lines
• The fourth network is a vent stack that allows for air pressure equalization, so the drain system functions properly
  
  This free plumbing book, available as a download, can help educate you as an agent, your homeowners, or commercial building owners, about their plumbing and how to prevent water leaks. (Full disclosure – I married into a plumbing dynasty and my husband and I wrote this book.)
  
  Also, this estimator Cost to Repair Water Damage - 2023 Cost Calculator (Customizable) (homewyse.com) can allow your insured to input square footage and a zip code to estimate what it might cost to repair a water damage event.
  
  Frequent reminders about preventing water leaks using email, newsletters and social media can help prevent losses.
  
  Water Supply Lines – Under Pressure
  
  Water lines to every sink, toilet, washing machine, reverse osmosis system and water heaters are under constant water pressure. Any leak in one of these lines will cause severe damage to a home in a short amount of time.
  
  For instance, a ruptured half-inch supply line will release ten gallons of water per minute. If that leak is on the second floor, the leak will cause major damage if not caught immediately.
  
  Supply lines to faucets often rupture, and, with water lines under pressure, quickly flood a home.
  
  Preventive maintenance of all supply lines to these fixtures will pay off. In a large, four-story condominium we serviced recently, the management team required every unit owner to update their supply lines every five years and provide proof of replacement completed by a licensed contractor.
  
  Water lines are a major cause of plumbing leaks since all water supply lines are under constant pressure. These are all supply lines which are under constant pressure.
• Toilet supply lines
• Washing machine lines
• Sinks and faucet supply lines
• Refrigerator supply lines
• Water softener supply lines
• Maintaining these lines is a must.
• Here are some general tips about proper maintenance.
• Overtightened lines often cause a water damage claim.
• Plastic nut supply lines are the worst.
• Replace plastic nuts with metal nuts.
• Steel braided supply lines are the best.

Let's Talk Toilets

Toilet Stoppages, Overflows and Leaks

Water pooling at the base of the toilet or staining the ceiling is usually a toilet wax ring or a leak between the tank and the bowl.

Your sewer line cleanout is not on the roof – the vent for the sewer system is on the roof. There are several good reasons we don't want plumbers walking on roofs if possible. This includes potential roof damage, fall hazards and no plumber can thoroughly clean a sewer line through a roof vent. This method is a stop-gap measure at best.

We always recommended the homeowners install a clean out on the ground for sewer cleaning if one does not exist. It costs a bit but can help if a line clogs repeatedly from roots or wipes or other issues. With a full-size cleanout, the plumber can properly clean the line.  

If there is a toilet stoppage and the toilet tank fill valve malfunctions, the toilet will overflow because the water will keep running into the bowl with nowhere to go. That is sewage water, which no one wants to contend with cleaning.

If the toilet floor bolts are loose, the toilet may move when in use. The bolts will eventually break, the toilet will move on the floor and leak at the bottom. Pull the toilet and replace the wax ring and floor bolts, reseating the toilet. If necessary, the toilet flange may need replacement.

Wax rings are important because you may get leakage around the bottom of the toilet. A second story leak will cause damage to the ceiling below.

It's important to replace wax rings every time your client pulls a toilet and ensure they caulk around the toilet. If you're getting sewer odors, it is usually the sign of a bad wax ring.

Pressurized supply lines, particularly those with a plastic nut, are likely to break. Replace them with metal nuts. Angle stops should be operational (tested regularly to ensure they are usable). If you can't easily turn the angle stop, shut the main off before you attempt to turn it, minimizing the chance of an angle stop failure, which will quickly flood a room. Use only stainless steel braided supply lines.

Many homeowners experience a clogged condensate line from the heating/air conditioning (HVAC) system, so at least annual HVAC inspections are a solid preventative measure.

Water Heaters

Water heaters need yearly maintenance. Recommend your insureds flush them yearly and replace the sacrificial anode rod every three years. Anode rods attract the sediment and corrosive elements (like minerals in the water) so that they corrode the anode rod rather than the inside of your water heater tank. Plumbers call the anode rod the “sacrificial" anode rod for a reason. The anode rod corrodes as the elements rust it out, which helps to prevent the water heater from rusting out, causing a flood.

Water softening systems change the type of anode rod needed from a magnesium anode rod to an aluminum anode rod.

When the anode rod goes bad, the minerals in the water attack the water heater liner. Eventually, the WH fails and there you have it, another pressurized line failure.

Water heater drain pans that can be routed outside can greatly reduce damage if the water heater fails (cost about $400). All new water heater installations should include the following.

• All water heaters should have two shutoff valves, one on the inlet and one on the outlet. Use a ball valve rather than a gate valve because they are more reliable.
• A full-port drain valve on the bottom can be flushed yearly or if it begins to leak.
• A water heater drain pan, which can help contain water if a small leak occurs, and which the plumber routes outside the home whenever possible. Noticing water in your drain pan means your water heater is leaking and can give homeowners a heads-up that they should call a plumber.
• A water pressure relief valve is always required by the local plumbing code. Incorrectly installed relief lines are found frequently when non-plumbers install water heaters. It must be routed by gravity to the outside of the house. If the heating mechanism malfunctions, the pressure relief valve routes the water outside or into a floor drain or sink or washing machine drain

Water heater emergency shut-off valves are available for about $1,000 for parts and labor.

Sewer Backups

Water damage that occurs from back-ups from sewers or drains is excluded under the HO-3 and the Business Personal Property Special Causes of Loss Form. Carriers will differ in how they view water that backs up from a clogged toilet or drainage system.

There is always the argument that the sewage system is not accepting the insured's waste, but ensure you know the various endorsements available to extend coverage.

Very often, root intrusion that captures waste exiting the drain or wet wipes or other items not meant to be flushed cause sewer backups. Warning tenants that placing these objects in toilets will cause them to pay the plumbing bill may help. We often get angry calls from tenants once we've told the landlord the contents that we retrieved from their drains. We simply tell them we're only reporting, not judging. It rarely helps.

Sewer backups can happen to anyone. There are many misconceptions about who is more or less likely to experience a sewer backup situation. And the truth is it doesn't matter if you live on top of a hill, if you don't have a basement, or if the home has never had a sewer backup issue before. Every homeowner and every commercial building with toilets have the potential to experience this type of loss.

One of my favorite claims occurred when the city sewer workers in a city I worked for was clearing a sewer main while this unsuspecting citizen was sitting on her toilet for her morning ritual. The force of the water flushed through the main came up her lateral line, blowing her off the toilet. A backflow preventer may have saved the day; however, not much later we passed a city code requiring them. 20/20 hindsight, no pun intended.

Water Pipe Leakage

Water pipe leaking usually occurs for the following reasons.

• Freezing
• Pipe outlived its life expectancy. Older piping pits on the inside, causing pinhole leaks that can quickly damage drywall and flooring.
• Soldered joint failure
• Driving a nail into pipes while hanging a picture or drywall repair
  

My favorite handyman was doing some work at one of his regular customer's homes. Just as he was about to finish the day, his customer asked him to hang a picture. Sure enough, he punctured a water line. He spent the next few hours awaiting the arrival of a plumber then fixing the drywall. The cost of the plumber well exceeded what he'd earned that day. Lesson learned, I guess.

Plumbing Fixture Failures

Reverse osmosis (RO) systems are a frequent and expensive source of damage. As RO systems age, the plastic becomes brittle and subject to cracking. We woke up one morning to our RO system leaking. Only marriage to a plumber saved our newly installed cabinets.

Water softener systems can cause significant damage when they fail.

Water Pressure Issues

Plumbing code requires a pressure regulator when the line pressure exceeds 80 psi, in Arizona. This may be different in other jurisdictions. A water pressure regulator helps to ensure water coming into your home from the city (or your well) isn't so high it damages your pipes. High water pressure causes premature water heater failure, leaking faucets, banging pipes, more wear on faucets and valves

Plumbers test water pressure on the outside hose bib. Water pressure at night is usually 10 to 15 pounds higher than in the daytime due to lower usage

Main Water Shutoff

The most important fact to remind your clients of is the need to know the location of their main water shutoff valve. Once located, they should test it frequently. We receive at least a call a week where the homeowner has tried to shut off their main water supply only to have a frozen or broken valve.

We highly recommend installing a ball valve rather than a gate valve, which will shut off and turn back on more readily. Gate valves sometimes won't. Ball valves operate with a quarter-turn of the handle, making them much easier to use when you need an immediate water shutoff, such as when pressurized lines fail. Ball valves withstand high pressure, are resilient and withstand high temperatures and water pressure.

Subrogation

Carriers lose many subrogation opportunities for the following reasons.

• The restoration company pressures the plumber to detail the cause of loss, and the plumber may not be knowledgeable or ethical
• The restoration company or the plumber discard items that could point to a manufacturing or prior plumbing error
• Code violations, especially in water tank installation by unlicensed “handymen." Water heaters and other fixes not to code can cause water pressure to rise, causing flex connector failure or discharge of the relief valve.

Follow up on water damage claims to determine if the insurer is taking steps to subrogate.

Change the Paradigm to Prevent Losses!

Here are a few tips to help your clients reduce water damage claims.

§  Encourage your clients to consider their homeowners policy a catastrophe policy. Always quote options for higher deductibles, then discuss the pros and cons of submitting smaller claims, especially in light of today's hard market.

• Urge your carriers to provide significantly lower premiums for significantly higher deductibles. While we don't set rates, we can certainly discuss our concerns that higher deductibles often do not significantly lower premiums.
• Urge your insureds to find a trusted plumber before they need one.
• Carriers – Consider offering a complimentary whole-home plumbing inspection or insist on pre-underwriting inspections

The Whole Home Plumbing Inspection

Home plumbing inspections take about an hour, and most plumbers charge for their time. Plumbers will check interior and exterior plumbing, with an emphasis on preventing interior water leaks. The inspection may include a sewer video camera inspection if the plumber suspects any problems, such as with aging sewer lines constructed of cast iron pipe, widely used in the 1960s.

Plumbing inspections can catch problems early, saving money. The insurance industry as a whole would benefit by working with the plumbing industry to provide or insist on these inspections since water damage claims cause so many losses. But prudent homeowners should also consider one, because no one likes to open their door to a flooded home.

How Can We Find Plumbers We Trust?

Some of the best plumbers in the business belong to this affiliation group.

• We refer only to one restoration company we trust, and never refer our customers to public adjusters. However, a few times a year we receive calls from public adjusters offering us up to 10% of the cost of the claim to refer a water damage loss to them.
• Most plumbers refer to restoration companies and public adjusters, and most receive a monetary incentive to do so. Be careful who you refer your clients to if they call in to report water damage. It's best to let the insurer do the referral since they are most familiar with solid restoration and plumbing companies. Let your adjusters handle from day one, not the restoration company personnel who visit your office.

Remember that suspicion is not proof of fraud. However, here are some red flags in plumbing losses.

• Insured calls to verify limits or discuss “what ifs" before a loss
• Insured is having financial problems, including possible foreclosure
• Insured is overly pushy for a quick settlement
• Insured “drops by" with important documents, avoiding the U.S. mail
  
• Insured is in the middle of a divorce or separation
• Family members are all out of town at time of loss, which is not their usual pattern
• Commercial insured is heavy on seasonal inventory or outdated equipment

If you suspect anything, let your claims adjuster know your thoughts, but outline your suspicions in a phone call, not in writing. Always keep your suspicions and opinions out of your management system's notes.

Don't let plumbing issues and water damage claims drown your profits. Educate and remind your insureds frequently about the need for proper plumbing maintenance. 

Last Updated: October 6, 2023

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