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15 Sep 16 16:09

There are three little words most women appreciate hearing every so often, but it's safe to say "you have mold" aren't the first that come to mind! At least, they certainly weren't what my mother was envisioning when the remediator left her house last weekend.

Several months ago, the water softener tank overflowed in my parents' basement and flooded over half of the flooring area. A month later, their water heater overflowed, also in the basement. Unfortunately events like this happen more often than you might think, with water damage being the most frequent cause of loss for homeowners' property policies.

The basement carpet was ripped up and replaced, and dehumidifiers were running non-stop for days. As luck would then have it, the new wood laminate flooring that had been installed started to buckle. The flooring company came to investigate and first alerted my parents to potential mold under the laminate. From there ensued a parade of experts and the final dooming conclusion that yes, there was in fact evidence of mold throughout the basement.

Besides sitting atop mountains of outrageous estimates and bills, my parents were left with the lingering question: could this have been prevented?

We hear a lot about the benefits of smart technology and how devices can automatically adjust your thermostat, or order laundry detergent when you are low, or even 'babysit' your sleeping infant. However, there are two important types of systems that could help prevent, as in my parents' case, thousands of dollars in water damage. Sensor technology, which is readily available and affordable, activates an alarm or sends a message to your smartphone once it comes in contact with moisture. This could have potentially shut off the water devices before any substantial leak occurred. Flow systems, on the other hand, are a more sensitive and advanced technology that monitors the flow of water running through the pipes. Any abnormal change in water flow would send an alert or even shut off the source of water. Naturally, they are more expensive than sensor systems – although not nearly as expensive as the cost for mold remediation.

That's not to say that these systems are flawless. Sensor technology requires the device to be placed in the exact spot moisture occurs. Flow systems are, for some, prohibitively expensive. Please see Swiss Re's recent trend spotlight on Smart Homes and these types of systems. http://media.swissre.com/documents/2016_06_smart_homes_spotlight.pdf

It would seem that insurers could benefit greatly in claims reduction through the use of these systems. Companies like State Farm and Pure Insurance are beginning to incorporate discounts for smart technology devices such as alarm systems and thermostat regulators. My parents were offered a discount in their renewal policy for having deadbolts on their doors, but there was no option to seek a discount for water system technology -- despite having previous water damage claims. It will be interesting to see how insurance applications and technical costing evolve as technology becomes more prevalent and trends in claims data become more defined. However, without existing standards in place, how far should insurers go in offering premium discounts for owner-installation? Better yet, should they offer installation services as part of policy coverage benefits? Furthermore, instead of raising your deductible or premium to cover prior water damage losses, would an agreeable offset be the requirement of flow system installation? I would love to hear your thoughts.

Oh, and in case you're wondering, my favorite three little words are "let's order in".


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1 Comment

Pierluigi Fasano - 17 Sep 2016, 9:18 a.m.

Jennifer, this is a great story to put in perspective some of the key elements of value when we talk of "smart home". And you highlight the typical "insurance regret" which happens only after losses: "...Naturally, they are more expensive than sensor systems – although not nearly as expensive as the cost for mold remediation.."


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