How would you keep working from home if you suffered a major water leak?

Why are water damage claims increasing in frequency?

In a report from Crawford & Company in 2020, James Dalton, the ABI’s Director of General Insurance Policy, is quoted as suggesting that there are more escape-of-water claims because:

• There are more plumbed in appliances
• More properties have central heating
• Properties have more bathrooms and toilets

One trend from recent years has been the addition of “boiling water on demand” taps to many kitchens.  Any additional item of plumbing increases the risk of a water leak.

There is one other notable trend – the quality of plumbing.  Many systems show signs of “wear and tear” after decades of use. Additionally, in many new build properties “push-fit” plumbing is used and, if the work is done too quickly, the “seal” isn’t always strong enough.

Whilst these examples are typically about domestic homes, the issues raised are just as applicable for commercial offices which are seeing the same changes impact them.

Why are claims so expensive?

The Crawford & Company report goes on to look at why water leak claims are often so costly.  Whilst you might immediately think about the damage caused to your contents – your furniture, your pictures and so on – the biggest cost is often the cost of repair, equating to 70% of the overall bill.

There are two factors here driving cost.

The first is as simple as inflation; whilst inflation generally has stayed low, the cost to carry out “escape of water” repairs has increased significantly – 46% between 2014 and 2019*.

The second is the cost of the items that might have been damaged and need replacing; over time, we have upgraded our properties!  Where once we had lino or bare floorboards, we now have expensive floor tiles (with underfloor heating that may also be damaged) and luxury carpet.  Where once we had white paint on our walls, we now have Farrow and Ball, behind which electrical wiring is all the hidden (which may also need replacing).

How would you carry on working?

Depending on the nature of the water leak, you may find you have to leave your home for a period of time to allow for it to dry out and for repairs to take place.  If you work from home, how would you be able to keep working?

Some home insurance policies are designed to cover the cost for you to relocate to an alternative property that has a similar set up and facilities to your existing working environment, enabling you to carry on working as you normally do.

What can you do to reduce the risks?

There are some simple things you can do that can help reduce the chance of a claim, and reduce the cost of a claim should a leak happen:

• Do you (and the others in your property) know where your stopcock is and how to turn off your mains supply?
• Is there a water-leak detection device that you could fit?
• Do you have Home Emergency cover?  This could help you get a plumber quickly.
• If your home is empty for any length of time, particularly during bad weather, you could consider having the property visited and checked.  You could also consider draining down the heating system (for example, a second property used for holidays that is left empty over winter).  That may not be practical in all instances – do you know what your insurer requires you to do to ensure that cover is maintained during any prolonged period of absence?
• Check your insurance limits – how much are you insured for?  What is the limit they will pay for a single item or set, such as your 3-piece suite?  How do you know if you have enough cover for all your household contents?
• If your insurance covers you for alternative accommodation, will they provide accommodation that is suitable for your work requirements?
• If you think you have a leak, the sooner you act to get it repaired, the better.  Can your insurer help with leak detection?

Through the IoD Professional Benefits Programme, IoD members benefit from a 12.5% discount** on Hiscox Home Insurance.  Their policy includes:

• A free Leakbot water leak detection device (which normally costs £149) for buildings insurance policies, to identify leaks as they are starting and before they become a costly problem
• Single items or sets up to £15k are automatically included under your contents cover and there’s no need to list them in advance
• Whatever the value of your contents that are lost or damaged, contents cover can be unlimited to help prevent underinsurance
• Where necessary, provision of alternative accommodation to meet the reasonable needs of you and your family (including working from home)
• You can leave your property unoccupied for up to 60 days without notifying Hiscox (as long as the heating is set to minimum 10c for the duration)
• Cover to trace a water leak from your plumbing/heating system, so that you can carry out the maintenance required
• Help towards the cost of metered water lost during a leak

0800 840 2331

Find out more

*Source ABI analysis of information from Office for Budget Responsibility Gov.uk.

Terms and conditions apply, for full terms see www.hiscox.co.uk/iod. The Institute of Directors is an Introducer Appointed Representative of Hiscox Underwriting Ltd who is authorised and regulated by the Financial Conduct Authority. For UK residents only.

Hiscox wants to help your small business thrive. Their blog articles will contain lots of useful information relevant to your growing business. But these articles do not constitute professional advice and must not be construed nor relied upon as such. To find out more on a subject we cover here, please seek professional assistance, specific to your circumstances.

**Any discount is only applicable to policies introduced via the Institute of Directors, whether existing or new, but could not be applied to policies that are being managed by an alternative third party such as an insurance broker.

Discount available for the lifetime of your policy applies on renewals while the Institute of Directors remains an Introducer Appointed Representative of Hiscox Underwriting Ltd.

Terms and conditions apply. For full terms and conditions see hiscox.co.uk/IoD/home-insurance.

The Institute of Directors is an Introducer Appointed Representative of Hiscox Underwriting Ltd. who is authorised and regulated by the Financial Conduct Authority. For UK residents only.