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Landlords affected most by 'escape of water'

Water leaks, malicious damage, and storms all impact on Landlords time and insurance premiums. The ability to 'bounce back' from an incident is vital, says insurer Zurich who advises tightening up on procedures to reduce incidents.

Top claim divers

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Type of claim	Percentage
Escape of water	43%
Accidental damage	14%
Malicious damage	11%
Impact third party	5%
Storm	6%
Fire	3%
Subsidence	2%
Flood	1%
Other	3%

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 The insurer's own data, updated annually, shows that escape of water remained the chief cause of insured loss to investors' property portfolios between 2004 and 2006, accounting for almost half (43 per cent) of settled claims in the last three years.

During this period the problem has cost an average of £1,760 per incident in settled claims with burst and leaking pipes, leaking domestic appliances and boiler and radiator defects on the premises the top three sources.

Malicious and accidental damage claims were also consistent over three years (responsible for one claim in ten year on year). These gave rise to an average cost of just over £1,000. Burglary and theft rates, however, witnessed a slight decline, from one in ten in 2004 to below this in 2005 and 2006.

Over the last three years storm damage has resulted in average claim costs of over £2,000 per incident. 2005 brought the highest frequency of claims over the three years for this type of peril (at one in ten).

Loss incurred by fire prevailed as the most significant single cost averaging £10,500 per settled claim, despite ranking seventh in terms of frequency and accounting for only 3 per cent of settled claims over three years. Claims citing arson as a cause accounted for just under a third of those settled over three years in respect of this type of peril.

Richard Elliott Head of Zurich Property Investors said: "In our experience many of the disasters that strike property owners and tenants could be prevented by tightening up on procedures.”

“Whilst the majority of losses are insured, the business interruption from an incident such as fire or escape of water can really impact on a business's ability to bounce back healthily."

He added, "The environment in which we operate is constantly changing. The introduction of the new Regulatory Reform (Fire Safety) Order and the recent ABI report on the increased need for flood defences highlight the growing need for UK investors to be proactive in identifying and managing risk. We are working with others to try to ensure government spending on flood defences is adequate to meet the growing challenges posed by climate change as recently outlined by the Stern report.”

“Zurich advises investors to seek every assistance in understanding flood risk and their responsibilities with regards to the new fire legislation, via a risk management expert."

Zurich has the following advice for property investors on what they can do to minimise the potential for damage to their properties:

• Engage with local authorities regarding the protection and ongoing maintenance of rivers, streams and culverts.
• Ensure that all areas containing water pipes and equipment are adequately heated. Lag and trace heat any pipework and equipment sited in unheated areas, such as canopies or roof spaces to avoid burst pipes resulting from frost or ice.
• Where possible, re-route water pipes that pass through vulnerable areas, such as data processing facilities.
• Ensure that valley gutters, downpipes and storm drains are designed to cope with heavy rainstorms and that they are inspected and cleaned regularly.
• Store vulnerable stock at least 100mm off the floor, e.g. on pallets.
• Ensure that vulnerable stock is not stored directly below valley gutters.
• Introduce an effective maintenance regime for plumbing, rainwater equipment, etc.
• Dispose of rubbish carefully - a pile of rubbish, even when stacked neatly against your premises, is an easy target for children playing or anyone who wants to start a fire.  So at night place combustible rubbish in a secure, preferably fully enclosed, metal container well away from the building.