Water is the new fire. Escape of water incidents have increased in frequency and severity in the past few years, with large losses now as frequent, if not more so, than fire-related incidents, according to the Construction Insurance Risk Engineers Group (CIREG).
A large number of losses have occurred on projects in the final commissioning stages once susceptible fit out elements have been installed. This comes at a time when advances in technology, such as monitoring water flow and automatic flow detection shut-off systems, are more widely available. Update of such systems continues to be low and they are rarely considered at the design stage. As a result, insurers' approach to escape of water risks is undergoing a toughening stance.
In the face of this stance, what does a well-managed and presented
claim look like?
Early engagement is key. If in doubt, notify your broker about circumstances giving rise to or likely to give rise to a claim - this is a process set out in the policy that should be followed. Inflation plays its part too. Invite a loss adjustor to the site, accompanied by your construction insurance broker, to inspect the damage and agree the next steps.
Commence remedial action
Follow the terms and conditions of the construction contract. Strip out to remove the damp load, but limit the work to what is reasonable, and then salvage what can be salvaged. Utilise heating and ventilation — get expert advice on drying if appropriate. Scope the damage and cost estimates as soon as possible, so that all parties understand the position on damage and quantum. And maintain open engagement with the loss adjustor, and your broker, in order to gain agreement on scope and costs as soon as practicable.
Presenting and settling a claim
It is the narrative that carries the claim, so keep a record of what was done in response to the incident and the reason for the selected course of action. Record the damage with surveys, photographs, and marked up floor plans, and capture the situation as it develops and/or worsens, including the cost of repairs. Apprise the loss adjustor of progress and changes in developments.
Remember: keep it simple. But also keep in mind that insurers’ appointed experts will scrutinise the detail of your claim. Every cost claimed must be linked to the damage caused by the incident, and substantiated with clear evidence.
While full recovery can never be guaranteed, if you are mindful of these steps in preparing your claim, there is a greater chance you'll be successful.
Construction and Delay Practice Leader, Claims Solutions