March 2007

Water Damage Takes Over as Top Household Claims Cost
A new type of claim has overtaken fire and theft as the most expensive claims cost in household insurance, according to Norwich Union (NU). The insurer has estimated that 'escape of water' (EOW) is costing the industry £250m in a year in claims costs, and is set to change the face of household insurance.

A spokesman for NU said " We need to raise awareness, and then start to mitigate the risks involved in EOW. This does not appear to be on anybody's radar, but the costs are set to increase. We need to prompt an industry action to respond to what is quickly becoming a dominating factor in household insurance claims.

EOW is the term used to describe damage to property caused by leakages from water tanks, pipes, heating installations or water apparatuses, such as washing machines. Existing housing policies were currently designed to respond to theft and subsidence. EOW will change the way household polices are rated and priced.

Poor quality plumbing fittings can cause significant damage in modern high-rise flats. Up to 10 years ago, theft was the most common claim. However of late the dynamics of theft has changed, making way for EOW claims to increase. Another issue is that EOW is a lucrative area for making fraudulent claims; unfortunately it is easy to burst a pipe and ask for a new carpet at the expense of the insurer.

Source: Insurance Age, 8 March 2007.