Water damage is one of the top drivers of property loss across commercial and residential real estate. Whether triggered by a major weather event or a plumbing failure, the effects can be disruptive and costly. Repairs, business interruption, tenant displacement, and mold remediation often follow. Your insurance only works if you cover the right risks, report damage quickly, and document thoroughly.
These losses are on the rise. As severe weather events increase and internal system failures grow more frequent, so do financial exposures. Construction shortcuts and aging infrastructure only compound the risk. With so much at stake, prioritizing prevention and response plans helps protect your property and bottom line.
Moisture can originate from outside or within. Weather-related causes include hurricanes, heavy rainfall, flash flooding, snowmelt, and ice dams. These events are becoming more intense and frequent.
Internal causes are more common and often more damaging. A burst pipe in an upper floor can ruin multiple units' walls, ceilings, flooring, and furniture. Leaky HVAC systems, corroded pipes, broken sump pumps, faulty water heaters, and poorly sealed windows can all lead to significant loss.
These incidents aren’t isolated. In 2024, the U.S. experienced 27 billion-dollar weather events, 25 involving water. Meanwhile, there’s been a surge in internal water damage claims, often caused by outdated systems or human error. Common oversights include missing insulation, improperly installed appliances, or failing to shut off water valves before long weekends.
The impact includes disruption to tenants and business operations, costly remediation, and insurance challenges (which often carry over into the claims process). Understanding how your insurance coverage works can help avoid costly surprises.
While water damage often leads to six-figure losses, many claims don’t exceed the deductible. With property deductibles usually set at $100,000, businesses frequently absorb the cost.
That’s not the only concern. Several common issues can hinder recovery:
As the frequency and severity of losses increase, some carriers are applying stricter underwriting terms. That could mean higher premiums, reduced capacity, or tightened exclusions in future renewals.
Organizations that experience repeat water claims may also face tougher renewal negotiations or higher retentions. Fortunately, many losses are preventable.
Proactive planning is the best way to minimize losses and protect insurability. Have a comprehensive water mitigation strategy in place for every property:
Consider these steps to reduce the risk of damage:
Shut off the water supply to reduce risk for properties undergoing renovations or seasonal closures. If third-party vendors manage building systems, ensure their contracts include clear roles and responsibilities for emergency response.
Even with solid preparation, incidents still occur. Knowing how to respond in the moment is just as instrumental as prevention.
Responding quickly and documenting thoroughly are key to protecting your claim.
Take the following steps:
Report all incidents, even if you believe the damage won’t exceed your deductible. Late or incomplete reporting can jeopardize coverage and lead insurers to deny claims.
Record every detail of the incident, including what happened, when, who responded, and what actions they took. This will help your adjuster assess the loss and ensure faster resolution.
Water damage is a growing threat, but it’s one you can prepare for. Strong planning, modern mitigation tools, and early reporting can reduce costs, preserve coverage, and improve outcomes.
Evaluate your current mitigation strategy:
Answering ‘no’ to any one of these questions signals it’s time to act.
Water moves fast. Updating your plan now helps you stay ahead of the damage.
Connect with the Risk Strategies Real Estate team at realestate@risk-strategies.com.
For over 30 years, Ken Cullen has worked with corporations worldwide on property loss prevention for multiple industries: textile and paper mills, automotive, food processing, public utilities, and more. With Risk Strategies, he assists clients in identifying property-related risks and ways to mitigate them, including water damage prevention strategies.
Mike Bostley handles large and complex property claims nationally and regularly sees preventable water-related losses. He and his team coordinate and oversee complicated claims involving multiple carriers, insurance policies, and claim adjusters.
This article recaps our recent webinar: Water Damage Mitigation and Claims