Water damage ranks as the third leading cause of homeowner loss, according to the Insurance Information Institute, and the third most expensive, with an average $10,234 claim, based on the trade group’s latest figures.
An Ounce Of Prevention
If you’ve had water damage in your home, or in a rental property you own, you know how disruptive and stressful the clean-up and restoration process can be. If there were a way to detect a potential problem source before it caused damage, would you try it? Would your insurer provide a discount for doing so?
The answer to the first question is probably yes. If a small cost lets you identify leaking pipes or hoses and running faucets before they create a flood, there’d be little reason not to do so. A leak detection system can help you do this. Basic models without shut-off capability start at less than $100. Professional grade systems can cost $1500 or more, which is still lower than some single year deductibles. There are many systems in the middle of the price range, depending on the capabilities you want and need.
The answer to the second question is, in most cases, no; very few insurance companies are offering premium reductions for implementing leak detection systems. “If insurance discounts become more widespread, and more people became aware of those benefits, then demand could increase,” observes Phil Georgiades, chief real estate agent at FedHome Loan Centers in San Diego. “This could be an especially attractive feature for investment properties where the owner or manager might not be around to notice a leak early on or shut off the water when necessary.” It’s also ideal for homeowners with ski cabins far from their primary residences; freezing pipes can create serious damage.
One insurer that is not only offering a discount for leak detection, but providing its policyholders with smart home kits that includes that capability, is the Palo Alto-based Hippo. “Every state has a different set of regulations; where allowed, the discount usually falls somewhere between 5% and 11%,” shares senior director of underwriting Mike Gulla. “Hippo began offering its smart home program in 2017, and has increased the activation rates of its smart home kits to more than 70%,” Gulla notes. The company hasn’t had enough time to prove the influence of the program, he says, but has seen that policyholders who activated their kits are more likely to renew their policies. Will the potential for increased retention and reduced claims encourage other insurers to offer leak detection capabilities? It will be interesting to see.
There are numerous systems you can consider, depending on the size and location of your property. Which one is right for yours? Roger Wakefield, LEED AP, owner of Richardson-based Texas Green Plumbing, and host of the popular All About Plumbing channel on YouTube, shares his experience with these systems, and advice you can use.
Jamie Gold: When it comes to smart home leak detection systems, what do homeowners need to consider in selecting one?
Roger Wakefield: They need to figure out where the device is going to be installed and which one is best for that location. Does it require electrical service, water line access, or Wi-Fi? What if the power goes out; will it still work? Is a plumber required to install it, or is this something they can do themselves? Is there a monthly subscription; if so, what plans are available? Does this unit cover all the water piping, including irrigation and the pool? Is there an app or a portal for the customers to check their system? There are many different systems, bells and whistles. All these things need to be considered in order to get the right unit.
Gold: Are there any hidden costs, risks or problems involved? If so, what are they?
Wakefield: Some systems must have power and a Wi-Fi system or they will not operate. These will not work outside, or underground at all. That makes them a bad choice for most Southern states where the meters are out by the curb, or the valve box is in the front yard. Only cellular systems will work out at the meter, because the Wi-Fi signal isn’t good that far out.
Gold: Are there certain “must have” features? If so, what are they?
Wakefield: We have to have a reliable cellular system that is capable of operating on a battery. The other “must have” is notification of a leak in less than one hour. A leak can cause serious damage if it’s not caught quickly.
Gold: Which new products on the market are you aware of, but haven’t used yet? What makes you want to try those, if anything?
Wakefield: I have checked into many different brands. There aren’t many that use cellular and are battery-powered. The only one that I’ve found that has worked here is the MeterDog. I like the LeakSmart system also, but I can’t put it underground. That makes it tough in our area.
Gold: Which are the easiest, most user-friendly to install and operate?
Wakefield: Any that don’t have to be installed by a professional plumber and have the requirements that people need make the most sense. Some have a sensor that detect any movement in the water meter, and just attach to it. That’s the easiest. Some have to have a plumber install the system. I love the water shut-off possibilities, so that makes them a great option.
Gold: What would you like to add on this topic?
Wakefield: The most important features for homeowners are reliability and ease of use. Think when purchasing, “Is this system the right one for my house?” Many times, it is the simple, reliable system that is needed to solve most water loss event issues. At the end of the day, we need to know if we have a leak under our house causing foundation problems.
The conversation has been edited and condensed for clarity.