This article is intended for information purposes only and should not be construed as professional advice.
Commercial buildings: Water damage prevention
Water damage in a commercial building can often be avoided through simple preventive measures and proper maintenance. Yet it remains one of the most frequent and costly types of losses.
At a restaurant just down the street from your building, a dishwasher hose caused water damage affecting three floors. Now the property must be cleaned and dried to prevent mould growth, then repaired and repainted... "Oh boy, we don't need that happening here," you might think, "even with commercial insurance."
The good news is that you can take action before problems arise. Here's how to reduce water-related risks in your building.
Water damage: frequent and costly
According to the Insurance Bureau of Canada, 95% of losses in condominium buildings are related to water.
Overall, water damage accounts for 48% of insurance claims, according to the Canadian Institute of Actuaries.
In other words, even a minor incident can lead to significant damage and substantial costs.
Why is water damage so common?
Several factors explain the frequency of water damage in commercial and condominium buildings. In practice, most incidents stem from three main causes: increasingly frequent weather events, equipment failures and inadequate maintenance.
First, climate change is increasing the risks. Flooding and freezing rain episodes are occurring more often than in the past, putting buildings under greater strain.
Normal wear and tear on building systems also plays an important role. A damaged pipe, an aging water heater or a sewer backup can cause extensive damage, even without any extreme weather event.
In some cases, neglect makes the problem worse. There's no need to look far: a water heater at the end of its useful life, a window left improperly closed or a toilet that's been leaking for two months.
The bottom line: many losses are preventable. According to the American Insurance Association, 93% of water damage incidents could be avoided with preventive measures.
What are the consequences of water damage?
Water damage can have serious consequences for your building, especially if the leak is not detected quickly. The longer you wait to take action, the more extensive the damage may become.
Condominium associations and condo owners can face a variety of impacts. Sometimes, the unit where the incident originated sustains little damage, while neighbouring units or those below experience severe losses. Beyond property damage and disruption, disputes may also arise.
For your business, water damage can mean:
- Business disruptions or temporary closure
- Electronic equipment rendered unusable
- Damaged inventory, furniture or records, sometimes affecting neighbouring premises as well
- The need to relocate temporarily
- Possible structural damage to the building
- Financial losses resulting from the interruption of normal operations
Certain insurance products designed for business owners include business interruption coverage. Among other things, they can cover employee wages following water damage while a business is forced to close.
On average, even when insurance coverage is in place, claim costs often exceed $10,000. In many cases, insurance policies exclude damage caused by flooding and sewer backup. If a pipe leaks inside a wall, they may also exclude long-term impacts such as mould growth behind the wall.
That's why it's important to understand exactly what your coverage includes. And of course, preventing losses is always better than crossing your fingers and hoping for the best!
How do you create a risk management plan?
A risk management plan helps you identify potential risks and determine how to respond to them. For your building or business, it’s an essential tool for minimizing damage.
To get started, ask yourself these questions:
- What could happen?
- What would you do if a loss occurred?
- How can you reduce the risks?
- Who is responsible for what in the event of damage?
Assess what could happen
Start by listing the risky situations. If necessary, work with a specialized firm to help you through this process.
Having both the interior and exterior of your building inspected remains the best way to identify problems before they occur. The inspection should include the roof, windows and plumbing system.
Also pay attention to how water drains from the property, including the slope of the ground and the condition of the gutters. Rainwater and snow melt should drain toward the street or a yard, not toward your foundation or a neighbouring building.
How can you prepare for water damage?
In the event of a loss, every second counts. The faster you react, the more you can limit the damage.
To make that possible, ensure that the right people know exactly what to do. Share your procedures with everyone involved in managing your building, including property managers, superintendents and unit owners.
The goal is simple: everyone, including you, should know how to respond at the first sign of water damage.
Prevent damage before it happens
Once the inspection is complete, you can take concrete steps to reduce your risks. Every repair or improvement helps make your building more resilient to severe weather and water damage. For example, you could install a backwater valve to help protect against sewer backup.
You should also take seasonal precautions:
- Spring: Clear snow and ice from roof edges to prevent water infiltration caused by the thaw.
- Make sure windows, patio doors and other openings are properly closed during summer rainstorms and thunderstorms.
- Clean gutters regularly, especially in the fall after leaves have fallen and at the end of winter when debris may have accumulated.
Are you part of a condominium syndicate? If so, prevention also depends on the cooperation of condo owners. Make them aware of the risks and encourage them to take preventive measures of their own.
How can technology help prevent water damage?
Technology can be an effective way to prevent water damage. One of Beneva's partners, HydroSolution, offers a leak detection solution. This type of system can add value to any risk management plan.
As soon as a leak begins, a sensor alerts a water alarm controller, a system that can even filter out false alarms. If a problem is detected, it immediately shuts off the main water valve. The owner then receives a notification advising them of the incident.
A second solution can centralize alerts from various units or premises. Accessible on a cellphone, tablet or other device, this tool is especially useful for owners of multiple buildings or condominium syndicates responsible for several units.
Protect yourself too
As you drive past a plumbing company's service truck, you wonder: "Another water damage incident in the neighbourhood?”
Take it as a reminder to do one more check, if you have not already done so. An effective risk management plan starts with a clear understanding of your current insurance protections. Review them to make sure they still meet your needs. If you have any questions, reach out to your business insurance specialist. Providing the support you need is part of their job!