Whats the biggest insurance claim for Aussie households?

Ross Greenwood speaks to Insurance company Chubb Australia and New Zealand Underwriting Manager Michelle O’Dowd who says internal water damage is now a bigger risk for households than a fire or a burglary after becoming 72% more common in the last five years.

Ross Greenwood: That is, that water damage is one of the most common and costly forms of damage inside our houses, and also for insurance claims. It’s more common, say for example, on fire or burglary, but the issue is about trying to protect your home from water damage. It maybe isn’t such a well-known thing. One of the big things about all these apartments that have had troubles and faults.

One of the biggest issues, as I understand, is water ingress. In other words, the properties have not been sealed properly and as a result, they have to be either repaired and fixed and in many cases, people who have bought apartments more recently, it’s a common situation, that water will get through some of that waterproof should have been put in place properly.

Michelle O’Dowd is with Chubbs Underwriting Business here in Australia. She’s the manager of underwriting in Australia and New Zealand Chubb Big Insurance Business and they’ve put together a report just detailing and outlining just how much water causes damage in Australia. Michelle, thanks for your time.

Interview with: Michelle O’Dowd, Underwriting Manager, Chubb Australia and New Zealand

Michelle O’Dowd: Thank you so much for having me.

Ross Greenwood: A few things about this. Number one, you put this out, because you would like people to have less water damage, that would mean less claims less inconvenience for them, but of course, the other interesting part about these is compared with all other domestic property claims, water damage is gone through the roof, at least over the past six years.

Michelle O’Dowd: It’s really true Ross, and I think there’s a couple of interesting facts that are in the Chubb insight report that we’ve released today. As you say, water damage claims makeup about 34% of the clients’ costs that we pay, much higher than fire at 16% and burglary, and yet I think a lot of people aren’t aware of the damage that it can cause and the terrible disruption it can cause to them as well.

Ross Greenwood: A lot of people would also recognize that a burst pipe, for example, that you yourself are responsible for fixing that pipe, which is where the damage was caused, but any damage that the water caused, that will be the subject of an insurance claim. That’s generally the way it goes, isn’t it?

Michelle O’Dowd: Yes, that is generally the way it goes and it’s interesting that you mentioned water pipes because we looked in this record at, what are the most common causes of those internal water damage claims, and we see a big increase in those water pipes and in particular, in both Flexi hoses. Those steel braided hoses that are so useful, because we use them in all of our plumbing appliances and our mixer taps and all the things that make modern life easy. [chuckles]

Ross Greenwood: They just go occasionally people have got to be conscious of it. As you do this and try and mitigate against that damage and the insurance claims, what are you saying to people, what things should they do to try and stop more of this water damage inside their houses?

Michelle O’Dowd: There are three really simple steps, I think that people can take. The first and the most simple is just knowing where the shut-off device is for the mains water coming into your home. That way, if you are at home when water damage occurs or when a water leak starts, you can actually turn off the water and consider turning off that water at the source if you’re going to be away from your home for an extended period of time.

The second is, know that those Flexi hoses do have a limited lifespan, and probably every five to 10 years, they’ll be out of warranty and probably they need to be replaced. Get a plumber in and get those Flexi hoses replaced. Finally, a new entrant I think into the Australian market is the whole concept of the water shut-off device. These are devices that can be installed in homes around Australia and they actually detect an unusual volume of water going through your pipes or an unusual length of time, and they can shut off water, if they detect that issue. That might actually stop a claim from occurring at all, or greatly reduce the damage and the inconvenience caused.

Ross Greenwood: The average claim $30,361 and that’s up from $17,600 in 2014. You almost shake your head when you see some of the photographs, some of the evidence you’ve got, but in particular when you see, say downstairs of lovely apartments or lovely homes, always looking like swimming pools with stairs leading to the upstairs bedrooms or whatever it might be. You just don’t imagine that a house could look like that, but as you point out, this is the reality of what some people wake up to when something goes in their home.

Michelle O’Dowd: Unfortunately, that’s true. It’s quite quiet and some of our clients have even slept through, hours and hours of water leaking from one level of their home to another. Open plan living and it’s a beautiful style of living, but it doesn’t mean the water can seep quite easily from one area to another and therefore extend the range that the damage occurs in.

Ross Greenwood: That’s just incredible. This is something that you as Chubb do on a regular basis, I presume. It’s just making people aware, but it’s also just understanding that really, water is an incredibly costly insurance item and also terribly inconvenience for the families, for the businesses as well, and they just are going to be on top of this issue.

Michelle O’Dowd: Unfortunately, it’s a fact that very often with water damage claims the damage is so extensive that people actually do need to move out of their homes and the repair work can take a long time because it can be quite complicated if you have damaged to a floor for example, extensive damage to the ceilings, even if it flows from one level into another.

Yes, it’s a terrible thing that people can take simple steps, they can turn off their water when they go away. They can check their Flexi hoses, and they can consider putting in one of those water shut-off devices.

Ross Greenwood: Not a bad idea. I’ll tell you what, Michelle, we really appreciate your time in the program. Here’s a little stat for you, 34% of all claims that we told you come from water, 16% Michelle told comes from fire, 9% comes from burglary. You are three nearly almost four times more likely to have a claim for water than you have for burglary and think about all the alarms and so forth you put into your homes.

Now, Chubb, I should tell you is the world’s largest publicly traded property and casualty insurer, they do this survey. Michelle O’Dowd is the underwriting manager for Australia and New Zealand, and Michelle I appreciate your time in the program this evening.

Michelle O’Dowd: Pleasure to be with you.

Image source: 2GB

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