"Remediation
and construction costs are largely faulted for the $66 million
increase in water damage insurance losses from 2001 to 2002"
Water
Losses Flood California's Homeowners Market
The cost of
household water damage in California continues
to grow at an alarming rate, while the volume
of insurance claims being filed for water
damage is climbing modestly, a new study has
found.
Remediation and construction costs are largely
faulted for the $66 million increase in water
damage insurance losses from 2001 to 2002,
according to the insurance industry survey.
The results continue a five-year trend of
increased homeowners insurance claims costs
for water damage.
By comparison, all other homeowners insurance
losses accounted for two-thirds of homeowners'
costs, but increased by $58 million last year,
roughly $8 million less than increased water
losses.
In its second year of surveying water-related
insurance losses, the non-profit Insurance
Information Network of California found that
insurers have paid more than $2.3 billion in
household water claims since 1997.
"The cost of water losses continued to
grow unabated in 2002," said IINC
executive director Candysse Miller.
"Water is absorbing a larger and larger
share of California homeowners insurance
losses."
Insurers attributed the increased expenses
largely to the price of repair and
remediation, costs that have skyrocketed as
insurers try to prevent small water claims
from turning into large mold losses. Other
insurers polled cited the high cost of
construction in a market where contractors are
in great demand.
Insurers representing 70 percent of the
California homeowners insurance market
provided data for the survey.
Though the number of water-related claims --
or insurance losses for damage caused by burst
hoses and pipes or leaks from washing
machines, icemaker connections, lavatories and
other household water fittings -- has varied
from year-to-year, the cost of water damage
has climbed in each of the past five years.
Between 2000 and 2002, the annual cost of
water claims climbed by more than $120
million.
On average, individual water claims cost
surveyed insurers $4,925 in 2002, nearly
double the $2,537 average water claim at the
beginning of the survey period.
The survey found that water-related claims
comprised one-third of all California
homeowners insurance claims filed in 2002.
Other common homeowners insurance claims
include fire, theft, liability, wind, and
lightning.
Based on trends of the insurers surveyed,
overall industry water losses between 1997 and
2002 could be as high as $3.3 billion --
exceeding the cost of many natural disasters.
