Water losses are impacting contractors of all sizes and trades

Protecting your construction projects and bottom line from water damage

Watch Nationwide construction risk management experts address water damage trends and share mitigation strategies

Water damage has emerged as a leading cause of loss in the construction industry. Recent data from Nationwide’s construction loss analysis reveals that nearly one-third of all liability losses can be attributed to contractors working around water.¹ This isn’t just a minor inconvenience—it can result in significant financial losses, project delays, and reputational damage for contractors.

According to Nationwide claims data, the cost of water damage claims is on the rise, with the median claim cost increasing by 21% year-over-year. Additionally, the number of large loss water claims exceeding $500,000 has doubled, and those over $1 million have tripled since 2015.² These statistics underscore the urgent need for effective water damage mitigation strategies.

Water damage affects all contractors

Water damage affects contractors of all sizes and trades. While contractors working directly with water sources, such as plumbing and HVAC, are at a higher risk (nearly 60% of water damage claims fall within these trades), the remaining 40% of claims involve a diverse range of trade contractors.² Even those not directly working with water can be affected by water damage, especially if they are working around piping, fire sprinkler systems, or using valves.

Nationwide recently saw an example of a large loss. According to Grant Hilton, Senior Technical Consultant, “I recently worked with an HVAC contractor tasked with upgrading the ducting and HVAC system in a large office building. Their scope did not include any water related work.  During installation of the sheet metal, an employee operating a scissor lift accidentally struck a sprinkler line, causing it to break.  Unfortunately, neither the HVAC contractor nor the General Contractor could access the shutoff.  By the time the Fire Dept. arrived, the damage had already exceeded $500,000.” This loss could have been greatly minimized with proper planning and response plans.

What you can do

It’s crucial for all contractors to recognize their susceptibility to water damage. Awareness and planning are key when working around pipes, pumps and fire sprinklers on a construction site.  Even contractors working outside of the building, such as those involved with land grading, trenching or excavating, can cause or be exposed to a potential water damage losses. To be successful, contractors should evaluate their potential water exposures on the jobsite, conduct a self-assessment of current policies and procedures and then adopt a formal construction water mitigation program to address their water risk potential.

Key steps to setting up a water damage mitigation program

Implementing a comprehensive water damage mitigation program will require you to address your exposure and controls in each phase of construction. Here are some key steps to get started:

Pre-construction phase

• Conduct a self-assessment of your current water damage prevention measures and identify potential risks.
• Develop programs and include smart water monitoring technology in your construction bids:
  • Wet work: Establish a permit system and utilize valve tags for any work involving water to ensure proper precautions are taken.
  • Water damage response plan: Create a detailed plan for responding to water damage incidents quickly and efficiently. Assign employees roles & responsibilities within the plan.
  • Smart water monitoring systems: Implement sensors to detect water, flow, temperature, and humidity. Consider adding automatic shutoffs to your project to further control water.
  • Severe weather plan: Develop protocols for protecting the site from weather-related water damage.
  • Closing Checklist: Use checklists to assess water damage exposures before site shutdowns.
• Assign employees roles & responsibilities for each step of the plan and provide regular training to ensure employees are prepared.

Ongoing construction phase

• Conduct regular inspections and continuously monitor the site for potential water hazards.
• Implement ongoing training and practice to ensure all employees know the water damage prevention and response procedures.
• Install smart water technology to monitor and manage water damage risks in real-time.

 Post-construction phase

• Inspect the building on a regular basis.
• Establish formal procedures for reporting water intrusion issues.
• Keep monitoring systems active until the building is handed over.
• Keep response equipment on site and available for quick deployment.

Construction Water Mitigation Program

The role of technology in water damage mitigation

Technology plays a crucial role in modern water damage mitigation strategies. Water leak detection systems are made up of a software platform, various sensors, and a communication network. The system is designed to work around the clock monitoring and detecting water problems as soon as they happen. When a problem is detected, alerts are sent to key contacts, and if enabled, remote shutoffs can be activated.

Additionally, tools like wet work permits and valve tags help manage and document water-related activities on the job site, ensuring that proper precautions are taken. Severe weather planning tools and mobile apps can provide timely updates and guidance on protecting the site from weather-related water damage.

Conclusion

Water damage is a significant risk for contractors, but with proactive measures and the right technology, it is possible to reduce or eliminate these exposures. By understanding the trends, recognizing the widespread impact, and implementing a comprehensive water damage mitigation program, contractors can better protect their projects, assets, and reputation from the costly effects of water damage.

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