Leak Detection Devices Can Reduce Average Claim Costs by $4K

Nationwide Insurance Co. has partnered with Resideo, a leading home technology company, to analyze the role Resideo’s Honeywell Home and First Alert devices played in loss prevention for their customers. The study found both a frequency and severity reduction for customers who had at least one Resideo device installed. In fact, these customers yielded a reduction in average claim costs of $4000.

Data collected between 2018 to 2022 reveals that about one in every 60 homeowners annually files an insurance claim related to non-weather-related water-damage or freezing pipes at the average cost of $13,954. All told, water leak damage is a multi-billion-dollar problem for US property insurers.  

Research shows that 93% of water leaks can be lessened or minimized if an automatic water leak detection and shut-off system had been present in the home. Installing water leak detectors—ideally connected to a water shutoff valve—in the home can help prevent detrimental water damage, but simply having leak detectors by themselves can be a benefit. 

Insurers See the Value

“Insurers that specialize in high value properties have required flow-based leak detection on a small portion of homes for well over a decade,” says Ian Greene, Marketing Director for FloLogic, a manufacturer of leak detection and automatic shut-off devices. “Today, the bar is much lower for the risk profiles that prompt a leak detection requirement—homes that aren’t typically occupied, have a minimal replacement value, or have any history of leaks, will require a device.” 

More mass-market insurers are recommending and even requiring leak detection as a condition of coverage. Some insurers offer premium discounts for having leak detection, while some insurers simply make leak detection a requirement without any discounts. 

The increased level of catastrophic property loss events—including wildfires and mass storms—has created a challenging insurance market. Catastrophic events are difficult to predict or prevent, but non-weather water damage (the second leading cause of insurance claims) is quite preventable thanks to leak detection technology.  

Resideo has been added to USAA's PERKS program to help its members protect against water damage and optimize home efficiency. USAA members can purchase Resideo's Honeywell Home smart thermostat and its First Alert® WiFi Water Leak & Freeze Detector at a discounted price through the PERKS program and eligible Homeowner policy holders can enroll those devices for a connected home discount. Additionally, Nationwide is helping to offset the cost of smart home solution purchases and installation.

The Role of Contractors 

Contractors are beginning to embrace leak detection sales and installations. 

“More are realizing they are equipped to install devices because the plumbing work is well within a licensed plumber’s wheelhouse,” says Greene, “whereas years ago many were skeptical, or perhaps intimidated with the idea of installing a home technology. Software is always improving with an aim toward making devices more user-friendly and better integrated with the home ecosystem. Devices with and enhanced ability to monitor real time water flow can help contractors address plumbing issues early on and enable more proactive services.”

To learn more about Resideo, visit www.resideo.com/us/en/.

To learn more about FloLogic, visit www.flologic.com.