A cure for water damage in real estate

Transcription

1 A cure for water damage in real estate Presented for BC Non-Profit Housing Association by Jeff Shearman, Zurich Services Corporation

2 2010 Zurich Canada Focused on our customer Reduce overall risk by reducing: Frequency Severity 2

3 2010 Zurich Canada Problem Study based on claims for Zurich customers Average water damage claim: $125,000 Average of other claims: $45,000 3

4 2010 Zurich Canada High cost of losses High restoration and replacement value of FF & E Concentration of offices/apartments/rooms Business interruption to uninhabitable areas Extensive clean-up followed 4

5 2010 Zurich Canada Common loss factors Equipment in tenant spaces Liquid piping located above spaces Freezing Contractor errors Poor sealing of floor openings Old equipment Poor condition of drains 5

6 2010 Zurich Services Corporation Understanding the exposure Very few areas of a real estate occupancy are free of risk Major exposed areas Living and office spaces Mechanical rooms Public areas Unheated spaces Construction areas Renovation areas Parking facilities Much of the plumbing is above head Much of the plumbing is concealed 6

7 2010 Zurich Services Corporation Sample leakage rates Pipe size Flow rate* ½ inch 45 1 inch inch inch 3040 *flow in gallons per minute at 50 psi 7

8 2010 Zurich Canada Internal sources of liquid Domestic water pipe Sprinkler pipe Steam or hot water heating system Chilled water cooling system Drain pipe Sewer system Storage tanks, including fuel storage 8

9 2010 Zurich Canada Internal sources - Why leaks occur Freeze-up Corrosion Poor installation Manufacturing defect Overflow Overfill (tanks) Poor maintenance 9

10 2010 Zurich Services Corporation Internal source loss examples System Cause Consequence Hot water tank Failed relief valve Damage = $1,500,000 2-inch water pipe Poor installation Facility down 30 days Sprinkler pipe Freeze-up Water on all floors Line on heat pump Failed hose Damage = $1,000,000 Old water supply Pipe not de-energized Damage = $500,000 during renovation 10

11 2010 Zurich Canada External sources of liquid Rain Cooling tower water Surface water Flooding 11

12 2010 Zurich Canada External sources - Why leaks occur Poor condition of roof covering Windstorm damage to roof Fire damage to roof (example - torch applied systems) Poor installation of roof covering Inadequate seals around roof penetrations for pipe and conduit 12

13 2010 Zurich Canada External sources - Why leaks occur Plugged roof drains Plugged sewer pipe Surface water Heavy rains Plugged drains New construction Water main breaks Flood 13

14 2010 Zurich Services Corporation External source loss examples System Cause Consequence Chilled water Broken fitting Damage to use areas + poor seals Water main Corrosion + Business down delayed shutoff approx. 2-3 months Fire water Roof fire by Smoke and water in contractor parts of multiple floors 14

15 2010 Zurich Canada So what do we do? Need to understand the exposure present for your particular facility Identifying key areas at risk Complete the checklists and apply actions based on priority Taking action to reduce frequency and/or severity 15

16 2010 Zurich Services Corporation What makes up a Liquid Damage Prevention Program? Risk Assessment - Identifying areas exposed - Identifying potential causes of loss Prevention - Preventative maintenance - Periodic inspections - Lock out/tag out procedures - Seal penetrations - Relocating equipment or piping Response - Spill carts - Notification training - Response training - Available staff Mitigation - Valve identification - Containment - Supplies - Back up procedures Recovery - Vendors readily available for repairs, supplies, equipment - Back up equipment Post incident analysis - How did it happen? - Can it happen again? - Do we have other areas with similar exposure? 16

17 2010 Zurich Canada Identify areas at risk Areas including: Occupiable areas Laundries Subsurface parking Mechanical rooms Location of this equipment/areas are just as critical as the equipment or contents themselves Top floor or roof Below grade basement Over main occupied area 17

18 2010 Zurich Canada Well sealed floor openings 18

19 2010 Zurich Canada Unsealed openings 19

20 2010 Zurich Canada and Claims resources Material is provided in the following areas: Solving the problem Preparing for loss When the loss occurs 20

21 2010 Zurich Canada Resources when loss occurs Quick list of action items for staff First 24-hour checklist Preferred provider list 24 hour claims number Real Estate Manager s loss handling checklist Real Estate Risk Manager s loss handling checklist 21

22 2010 Zurich Canada Sample checklist items Is the checklist completed for new construction? Is someone immediately available on all shifts to respond to leaks? Does this person know the location of all valves? Is the cause of any leak analyzed to determine if its an isolated or a system-wide problem? Are spill response supplies quickly accessible? 22

23 2010 Zurich Canada Resources to prepare for loss List of spill response supplies for a cart or central storage area Phone list for vendors often needed during emergencies Staff training on response to calls including contractors Post photos of shutoffs and shutoff procedures 23

24 2010 Zurich Canada Prevention measure Exercise valves on a regular basis Respond to all leaks regardless of how small Keep temperature above 40 degrees F at all times Watch so contractors don t use tubs and commodes as drains Install shutoffs when new installations occur Install dikes and drains around pumps and other equipment Test all lines and drains prior to placing in service 24

25 2010 Zurich Canada Additional Preventive measures Check key potential failure points every time you service a unit Have a line item in tenant agreement Replace parts with a shorter life span on a programmed basis Keep heat on in unoccupied units or drain system Check for problems elsewhere in the stack if drains are the issue 25

26 2010 Zurich Canada Preparedness Measures Have a spill cart containing plumbing supplies, valves, and spare pipe. Check regularly so supplies are not removed for other work. Position so it is readily available Train and re-train staff on flow of water into and out of building. Have diagrams available showing flow of water Place pictures showing shutoffs, what areas serviced, and how to properly shut off equipment Have water extraction equipment on hand Have numbers for contractors on hand Have salvage equipment on hand 26

27 2010 Zurich Canada Response measures Encourage tenants to report leaks regardless of how small Have tenants also report and noticeable changes in water pressure Aggressively respond to any liquid spill Get liquid to drains as fast as possible. Cover valuable equipment with tarps Remove materials that can absorb water as soon as possible Get contractors involved as soon as possible Notify insurance carrier as soon as possible 27

28 2010 Zurich Canada Recovery measures Work with insurance adjusters and their contractors to dry out facility Save any broken parts that are suspected to be involved in incident Find alternative arrangements for clients Test any new lines, pumps, etc for integrity before going back in service Inventory everything damaged and photograph or video if possible If a hose or pipe failure is due to longevity, look for and replace like materials in facility 28

29 2010 Zurich Canada Thank you for attending. A session evaluation survey link will be forwarded to you shortly. We look forward to your feedback Zurich Canada. All rights reserved. The information in this publication and presentation was compiled by Zurich Canada from sources believed to be reliable. We do not guarantee the accuracy of this information or any results and further assume no liability in connection with this publication, including any information, methods or safety suggestions contained herein. Moreover, Zurich Canada reminds you that this publication cannot be assumed to contain every acceptable safety and compliance procedure or that additional procedures might not be appropriate under the circumstances. The subject matter of this publication is not tied to any specific insurance product nor will adopting these procedures ensure coverage under any insurance policy. 29