Understanding the Growing Impact of Escape of Water Claims

Tim Baxter, Business Development and Relationship Director, and Niamh Hoey, Broker Development Manager discuss the growing underwriting and claims considerations surrounding escape of water risks across Great Britain and Ireland. 

Q. Escape of water is frequently described as one of the most significant drivers of property claims. From your perspective, how material is the issue for insurers today?

A. Tim Baxter: It is far more significant than many people assume. What makes it particularly challenging is the combination of frequency and severity.  Many people associate large insurance losses with fire or storm damage, but escape of water can create very substantial losses, especially where the property is unattended for a period of time. If you look at our own claims experience, the data shows that during major freeze events, the volume of claims increases sharply, but more importantly the severity escalates significantly.  That trend - lower frequency but higher severity - is something brokers need to be very aware of.

Q. Why does escape of water create such severe losses in those types of property?

A. Tim Baxter: When a pipe fails, the cold-water tank will continue to refill and drain through the burst pipe. In practical terms, water can flow continuously through the property. The result can be extensive damage to floors, ceilings, electrics and contents.  It is often the case that the severity of claims far outweigh the frequency. You may see relatively few incidents, but when they occur the cost of reinstatement can be extremely high, particularly if the building has to be dried out and repaired over a long period.

Q. Is there a gap between how customers perceive the risk and the reality of the damage that can occur?

A. Tim Baxter: Yes, and it is quite a pronounced gap. Many policyholders associate escape of water with fairly minor events - a washing machine hose failing or a leaking pipe under a sink. Those things do happen, but they are not representative of the larger losses we see.  When you compare that perception with the claims data, particularly during winter periods, it becomes clear that escape of water is one of the most financially significant risks in the household market.  This is why education is so important. Brokers play a key role in explaining not just that the risk exists, but how severe the outcome can be if preventative steps are not taken.

Q. Niamh, are the dynamics similar in the Irish market?

A. Niamh Hoey: Broadly, yes. The fundamental risk factors are the same. We see escape of water as a significant issue in Ireland, particularly in properties that are intermittently occupied - second homes, holiday homes and rental properties.  Weather can also play a role as cold spells create a clear spike in burst pipes. The cost of repairing escape of water damage has also increased significantly in recent years, reflecting both inflation in building costs and the scale of damage these events can cause.  But the real issue is often not the freeze itself. It is the lack of intervention before and after the pipe fails.

Q. What kinds of preventative measures are you looking at?

A. Tim Baxter: The most effective solution is often the simplest one - turning off the main water supply and draining the cold-water system when the property is unoccupied.  Most homeowners can manage this. Knowing where the stopcock is and how to drain the system can significantly reduce the scale of a potential loss.

Q. What about technology solutions such as leak detection devices?

A. Niamh Hoey: Technology certainly has a role to play, and there are some very sophisticated systems available.  However, it is important to understand what those devices actually do. Many leak detection devices will notify the policyholder that water is escaping, but they do not stop the water supply. If nobody is present to act on that alert, the damage can still occur.  Some systems can automatically shut off the water supply, and those can be more effective. But they are also more complex and expensive, which means they are not always adopted widely.  So again, it comes back to education and simple preventative steps.

Q. Can you share some examples that illustrate the scale of loss that can occur?

A. Tim Baxter: We handled a claim involving an unoccupied property where a pipe burst during cold weather and went undetected for several days. Water spread across multiple floors, causing a collapsed ceiling, damaged flooring, and extensive electrical and internal damage. Drying and reinstatement took months.  In a more recent case, a property in the final stages of sale suffered a loft pipe burst despite heating being maintained at 21°C and pipework lagged. The insured responded quickly, but damage from loft to ground floor left the property uninhabitable, with a claim reserve of around £300,000.  Crucially, draining the system would likely have prevented the loss entirely.

Q. Finally, what should brokers be discussing with clients in relation to this risk?

A. Niamh Hoey: The key message is understanding the potential impact. The reality is that the cost per loss is increasing, and the financial consequences for customers are becoming more severe.  For brokers working with clients who own unoccupied or holiday properties, the conversation should focus on practical prevention. That includes knowing how to isolate the water supply, understanding the risks of leaving systems pressurised during winter, and ensuring the property is checked regularly where possible.  If brokers can help clients understand those risks and take simple preventative measures, the difference in claims outcomes can be very significant. Ultimately, that benefits both the customer and the insurer.