Water Damage

Service: Insurance
Subject: Facilities
Setting: Property

Sector: Acute Care

Water damage is a physical loss resulting from the accidental discharge, escape and leakage from the plumbing system, equipment such as air conditioners, or environmental sources. Water damage can lead to significant costs for clean-up and decontamination, loss of furniture and fixtures, computer equipment, medical and office supplies, medical equipment, and valuable documents and artwork and most importantly, can displace patients and interrupt healthcare services. Given that pipes are generally out of sight, behind walls and ceilings, leaks may not be detected for some time. The growth of mould following a water leak or water damage is a significant concern. Regular inspection of plumbing systems, roofs and downspouts, and in the event of an emergency, quick access to water shutoff valves are key to managing water damage risks.

Common Claim Themes

  • A large percentage of water damage and flooding losses are preventable.
  • A quick effective response can mitigate the overall exposure to operations.
  • Wear and tear, rain, clogged drains, and frozen pipes are leading causes of water damage.
  • Costs associated with decontamination and relocation following water leaks greatly exacerbates damages incurred.
  • Water leaks in sensitive areas such as operating rooms and computer server rooms can cause significant operational interruptions.
  • High claims costs are associated with removal of asbestos.
  • Mould contamination may require extensive remediation of building elements and increase claims costs.

Case Study 1

A water pipe burst on the upper floor of a high rise healthcare building and water cascaded down including inside the organization’s leased areas. Due to the extensive damage, the majority of the leased area was not usable and care services were suspended. Mould developed which significantly added to the claim’s cost. Care services were relocated to another floor within the same building and repairs took several months.

Case Study 2

A 20-30 year old domestic hot water copper pipe burst and water escaped unnoticed for approximately an hour. Upon investigation, it was determined that a brass connection had corroded and broke. Several years prior to this event, the healthcare organization also experienced a similar event in the same building. The original copper plumbing had been upgraded after the initial event; however, this section was missed. During the second event, asbestos within the building materials complicated the restoration which added to the time and cost. Repairs were carried out over the December holidays and weekends to minimize disruption to the healthcare organization. Unavoidable delays were experienced which resulted in some mould development and repair work took approximately three months.


Mitigation Strategies

Note: The Mitigation Strategies are general risk management strategies, not a mandatory checklist. Please also refer to the Sewer Backup Risk Reference Sheet.

Water Systems

  • Ensure all water shut off valve locations are clearly identified/well marked (including indication of water flow direction) and accessible.
  • Ensure Facilities staff is aware of the locations of all water shut off valves, are trained to shut valves to stop leaks, and are trained in the use of mitigation supplies.
  • Create and maintain a diagram of the domestic and chilled water lines and shutoff valve locations and have them available for first responder use.
  • Conduct patrols of unpopulated areas of the premises after hours to facilitate timely detection of leaks.
  • Conduct inspections of all areas with water systems/pipes, including stairwells, underutilized/vacant rooms and fire pump and sprinkler riser rooms, to confirm adequate insulation and heating.
  • Maintain all contracts, records and invoices for plumbing related purchases, installation, service and maintenance (these will assist in the investigation of losses and identify where there is a potential for third party contribution/payment of losses).

High-Value Equipment Areas

Definition: High-value equipment is defined as equipment with either high replacement value or high operational impact. Consider reviewing upcoming lease agreements with your property insurer.

  • Avoid locating high-value equipment below grade and below areas where water leaks or spills frequently occur (e.g. cafeterias, rest rooms, and mechanical rooms).
  • Survey rooms/areas with high-value equipment and seal wall, roof and ceiling penetrations to reduce the potential for water intrusion.
  • Implement the following risk mitigation strategies when domestic and/ or chilled water lines are present in ceilings above critical equipment:
    • Reroute the pipes during the next upgrade or renovation in the area;
    • Provide secondary containment on domestic and chilled water lines (such as concentric piping, which drains to a safe location, equipped with leak detection) or, provide noncombustible pans over the high value equipment (pans should drain to a safe location, and be equipped with leak detection); obstruction of ceiling sprinklers should be considered when installing pans.

Preventive Maintenance

  • Inspect and exercise all domestic and chilled water lines control valves at least semi-annually.
  • Ensure annual inspection and testing of all plumbing fixtures and associated apparatus including sprinkler systems; ensure the replacement of older/deteriorated pipes and connections.
  • Conduct quarterly inspections of high pressure pipes.
  • Inspect the roofing systems at least quarterly. This inspection should include drains, gutters, downspouts, roof covering and seams, flashing and securement of mechanical equipment.
  • Include in the winterization program routine inspections and maintenance of:
    • Space and small room heaters and heating systems for water systems (including sprinklers);
    • Heating/temperature in stairwells – top and bottom exterior door areas, generator, fire pump and sprinkler riser rooms, penthouses, trailers and temporary offices;
    • Non-freeze and dry pipe sprinkler systems (including draining all low points and verifying adequate air pressure).

Emergency Response Plan

  • Develop a water emergency response plan to help manage water related events:
    • Shut off the source, if possible;
    • De-energize electrical equipment, if necessary;
    • Begin clean-up of liquid;
    • Initiate repairs;
    • Investigate and evaluate any damage to drop ceilings, drywall, equipment and floor coverings.
  • Include on the water emergency response team the following positions with alternates on all shifts.
    • Someone designated to investigate leak and determine the source and severity;
    • Someone authorized and trained to shut the valves to stop leaks;
    • Someone designated to retrieve mitigation supplies.
  • Provide training to response team on a semi-annual basis. Simulate emergency scenarios and evaluate action plans and response. First responders should be familiar with:
    • The location of floor and building shutoffs for sprinkler systems, domestic and chilled water systems;
    • Electrical systems and how to de-energize critical pieces of electrical equipment;
    • Mitigation efforts such as water cleanup, dehumidification and protecting equipment.
  • Include various water emergency scenarios (e.g. broken pipe, frozen pipe, roof leak, and accidental sprinkler discharge) in the emergency response plan and training drills. Time is of the essence to limit damage.
  • Ensure after-hours administrators are aware of the water emergency response plan.
  • Pre-identify and establish partnerships with specialists required to manage water/sewer related events (including cleaning/drying specialists, industrial/occupational hygienists, etc.).
  • Ensure the use of dry heat rather than wet heat in the remediation process to attenuate mold formation.
  • Ensure the use of mold disinfectant cleanser on carpeting and drywall.
  • Ensure the replacement of drywall or carpeting that has been wet for over 24 hours.
  • Monitor building moisture levels to ensure that expenses related to drying are limited to those required to achieve normal levels.