UPDATE: There was a significant data coding error in this analysis. In some of the Insurance Information Institute tables, the position of "wind and hail" and "water" is flipped, so some of the values got put in the wrong columns when I copied the data into a spreadsheet.
After correcting this, "water damage" is still responsible for a large chunk of the increase in expected losses (around a third), but now wind and hail damage is responsible for the largest portion (around half).
This is still somewhat confusing, since loss ratios are down in most wind and hail-prone states, but it's now confusing in a different way.
I wonder how you could add number of washrooms per household, as well as the percentage of homes with dishwashers, as well as fridges with icemakers/water dispensers over time to see if it is sinply the increased amount pf plumbing causing this? More plumbing per house is more chances for something to fail.
Anecdotally, the most common home insurance claim in people I know is either a dishwasher or water equipped fridge leaking.
Those are exactly what came to mind for me as well. I’ve had a roof blow off during a storm myself, but most other water related problems I have seen or experienced are small things that are hard to notice till they do massive damage, like leaking appliances.
I wonder if some of it is just the aging housing stock. We had a huge construction boom in the '60s to early '70s, and then tapered off, and haven't really ever gotten back to building at the rate we did back then, certainly not relative to population. A ton of the housing stock in cities and inner-ring suburbs is like 50-100 years old. My own house was built in 1940. I'm not sure whether the pipes that it had when we moved in were original, or something that had been put in around the '60s-'70s. But they were galvanized crap that had corrosion inside that had narrowed the pipes down to like a quarter the original diameter. We replaced _almost_ all of it fairly early on -- and then one of the few parts we hadn't gotten to caused a leak, which led to some annoying repair work. (Though not quite enough that we bothered to file an insurance claim, because we save some money on our premium by having a relatively high deductible.)
The electrical system definitely was original -- knob and tube wiring, with the cotton insulation mostly flaked away. _And_ they had blown in foam insulation over that. And then the air return to the ancient gas furnace had been run under the house, supported by a wooden frame, which termites ate. So when we moved in, there was NO air return to the furnace. It's truly astonishing that the homeowner died of natural causes, rather than carbon monoxide poisoning or a fire. He was the original owner of the house from 1940. Died in his home at age 97, having done a ton of unpermitted, low-quality work on it... At this point the plumbing, electrical, and HVAC in the house are _all_ new, there's nothing left of what was here before we bought the place in 2017. Also the whole roof -- rafters and all. I think we've spent as much on improvements, as we have on the downpayment + mortgage payments. :-P
As I understand it, there are monitoring systems that can be installed to detect water leaks, but I don't believe they are common. Maybe it would be in everyone's interest if this changed, either through incentives or mandates (if indeed they work).
I have to ask, given the payout/damages vs. the impact to rates, why the heck anyone would even file such a claim unless they've been gone for a month and come home to a subfloor delaminating and joists already sagged.
I'll bet mold claims are built into water damage. This was a non existent problem until fairly recently. Now every homeowner is scared to death of "toxic" mold. No matter that mold spores are present virtually everywhere and are not active until a certain level of humidity is reached and go dormant once humidity falls again. As a remodeling contractor I had many conversations with hysterical homeowners about some little moldy or just damp area that was exposed during demo. They pretty much all wanted to call in specialists in "mitigation" - incredibly expensive experts who basically spray some bleach around and run some dehumidifiers. Because it was on their dime they usually passed but if insurance was paying for it you know it would be turned into a huge deal.
And mitigation/remediation costs are now built into the insurance claim industry. Having briefly worked on that dark side, boy howdy is it rife with grift and overspending. Any water event immediately results in deployment of extraction equipment, air scrubbers, dehus, drywall, flooring and insulation removal and testing, testing, testing. And then there's gray water. A reported toilet overflow will result in a remediation bill of $5-10K easily. Look at the massive expansion of mitigation contractors in the past 10 years - the game that is played with Xactimate to maximize the cost of mitigation/reconstruction is a big driver in premiums. The profit expectations are triple what is expected in new construction or remodeling. I did reconstruction for a year and would never do it again because I felt so dirty.
Multifamily property owner here. I agree completely. Remediation contractors charge $175/day for a dehumidifier that costs less than $1,000 new. Labor rates and hours have also risen significantly. I assume insurers pass the buck because they can push the costs to insureds, although I've lately seen more pushback from insurers.
Very interesting stuff and I will say I agree with most or all of it. I live in California where controlling humidity is not much of a problem. It's dry in the summer and more humid in the winter so heating lowers the relative humidity and that controls any moisture accumulation indoors. I think the author(s) have a realistic approach to mold - it will never be eliminated but can be controlled and kept dormant by controlling humidity levels.
The analysis adjusted for home size, but I think home quality is also a thing - nicer features and higher ceilings, which is reflected in increased home cost. A cursory Google search shows increased home prices over time, adjusted for inflation. Insuring a more expensive product is more money. Is the insurance increase proportional to increased home valuations? I like the per capital graphs, but I also want to see a graph of per home cost. Otherwise, a great blog. Thanks for writing.
This is definitely part of it. Think of an "average" bathroom, or kitchen from the 50s or 60s, compared to what they look like and contain now. The average quality has gone up considerably over the last several decades.
Need to look at “reinsurance” as the transmission mechanism through which losses in one State are spread to policyholder premiums in other States. Rates are set state by state but embedded therein are the costs of reinsurance which generally are priced based on a diversified portfolio of underwritten risks.
Not sure if I missed this in the analysis of costs, but what about overhead, underwriting costs and cost of capital (e.g., all the non-claim back-end costs)? The analysis here seems to focus on (1) cost to consumer, (2) profit/net income and (3) claims (by number and value). Not sure whether this was evaluated and dismissed as negligible, but seems worth flagging.
Caps on profitability typically pay minimal heed to increases in costs (and 5% profit on 100B is a lot better than 5% of 10B from a C-suite level). Modern corporate structuring is pretty good at being able to avoid recognition of net income, and acquisition-based growth can soak up any amount of excess cash flow.
Relatedly (and I know this is not really a focus for this substack), is there any indication on how much M&A has occured in the insurance market? Cursory glance indicates a fair amount (consistent with most other sectors in the US).
I think factors related to overhead and underwriting costs are mostly screened off by just looking at losses specifically, which (I think) don't include overheads, and at a national level loss ratios are pretty constant.
Are you referring to an insurance company's cost of doing business? This article seemed to refer to profits rather than gross income so business costs would already have been factored in.
I wonder if newer sheathing and siding systems are more likely to lead to losses due to water damage. Brick and plaster can both absorb substantial amounts of moisture without failing while newer systems are better at keeping water out but are perhaps less resilient to water incursion once it happens?
That was exactly my thought! Our subdivision was built in the 1980-1990s. Many of us are debating when to repipe our homes—an expensive and disruptive endeavor. It’s hard to tell when pipes may fail, and the monitoring technology to catch it early has problems, too. So maybe pipes fail due to age and lack of proactive replacement?
I’m skeptical of this though—it feels like adjusting for construction cost should capture this effect? (Homes depreciate, this should cause insured value to go down assuming constant construction costs) Similarly I could see this increasing insurance cost as a proportion of total structure value but not on an absolute basis.
Hm, but that could still cause the damage percentage to skew towards water damage. e.g. say a 20 year old house is twice as likely to get water damage as a 10 year old house but has depreciated away half its value. Then on average you'll pay out the same amount in water damage (you pay out half the amount to twice as many houses). But you'll only pay half as much for fire or storm damage (houses don't become more likely to get in a wildfire as they age). So you'll get a data artefact where it looks like water damage is accounting for a larger percentage of insurance costs as houses age
(and this can get messier - maybe fires actually get more common, but not enough to offset this effect, so as a percentage of damage costs water damage is what's going up, but the cause of the increase in total costs is still the increase in fires).
I was responsible for underwriting and pricing across the US for an extremely large company until about 20 years ago, when I retired. I guarantee you that if you talk to someone in underwriting or pricing at a large carrier that they can tell you exactly what is going on. My guess is that the severity of water claims is going up due to rising deductibles (small claims are weeded out) and the change to nicer quality wood flooring and such. A leak on tile or vinyl is inconsequential, to a nice wood floor it might be tens of thousands. That is just a guess though, as I have no contact with that world any more.
. On the subject of home ownership and insurance companies I have been reading this book entitled “the vast machine” by Paul edwards. After reading this I started thinking is the reason why insurance companies are skeptical of climate change is that their belief based on the “historical data vs computer modeling” debate?
This would be good to look at, though my rough expectation would be that the other factors I've looked at (such as construction costs) would mostly account for this.
Amazing post ! Very informative and really appreciate the amount of work that went into this. Wanted to note that the mouseover for the scatterplot of "Loss ratio vs per capita premium increase" isn't rendering properly.
No one in my area ever pays to replace their roof shingles. You can always find a roofing contractor who will work directly with your insurance company and say that you have hail damage that should be covered by insurance. I don’t think this was common 20 or 30 years ago. It feels very sketchy to me, but it’s how it works here. There’s a different roofing company doing work in my subdivision every couple of months. They go door-to-door and ask if they can use their drones to inspect your roof for damage for free. I would think it’s driving up insurance premiums. For reference, I live in a suburb of Atlanta.
Roofing material manufacturers (and vinyl floor companies) change their pattern by a fraction of an inch every three years so if your roof is over three years old the roofer will automatically claim the roof must be replaced because they can't match materials for the repair.
Look at the increasing regulations and zoning issues, which I believe are the significant reason costs are rising. You live in a house that’s 30 years old and need to rebuild with heat pumps and no gas appliances, necessitating larger electrical systems (you may have to put an EV hookup n the garage, even if you don’t drive an EV)…
I suspect you are correct. Note though, the updated codes are intended to address design issues that have caused previous insurance claims. Theoretically, future claims should be reduced by codes changes making houses safer and longer lasting. Likewise, the gas appliance issue is meant to address climate change which we already know is a major driver of insurance costs.
My son-in-law works for a weather consulting company and they are predicting an increase in the severity of weather events. Insurance companies are pricing policies using those predictions.
I should be more precise. Climate has been changing since the beginning of Earth (where are those dinosaurs anyway). What is unproven and unprovable is man is causing it. So, wise people would manage the outcome by clearing brush, filling reservoirs and just plain not building in fire (or flooding or hurricane) prone areas. But, nah…
Clearing brush around houses but not in the forest. Part of our wildfire problem is that fires need to happen and we prevented that for a couple of decades. Small fires vs big fires.
No, the climate has not changed with this speed. I'm not a climatologist but 96% of those scientists believe humanity has significantly affected the speed at which warming is occurring. Plants, animals and society need time to adapt to changes in weather. When it goes too quickly in either direction, animal and plant species die and human settlements suffer. If every house in Pacific Palisades had been updated to current codes the loss would have been dramatically reduced but that takes time. One of the big questions is how we will deal with changing crop conditions. Ancient Egypt fell because of this. Even today, 90% of the US population exists where it rains, at least until California enter this sustained drought.
My wife was an automotive claims adjuster for several years and trained in claims, loss ratio, accounting set asides. 1970s. She points out one are you missed.
Insurance pushed higher deductibles, and that is a forcing function for the insured to NOT make a claim.
A. They don't want to pay the highdeductible.
B. This limits more smaller claims to be hidden from the Insurance companies and...this data
C. Therefore only larger more catastrophic claims are more often made than small claims
D. Policy holders also do not want their existing policy increased because of a small claim. Insurance underwriters will risk adjust their premium. The policy holders benefit is reduced or goes negative applying for claims marginally above the deductible.
I had a 1/2" copper knuckle freeze on a house in Michigan while we were away. We were new to it. It was a cold water supply to a useless humidifier in a 2nd floor AC closet. Ran for a day or 2.
Finally a neighbor called and asked if I wanted our water shut off? Why I asked?
It was flowing out the front door. Catastrophic. Destroyed everything from the attic insulation, all walls. Wood flooring.
Water damage is something you can't live with for long. Carpet, cellulose based materials.
Texas here; massive insurance claims were filed here in 2021 for flooding caused by freezing pipes. Homes in Texas are not typically constructed to prevent pipes from freezing (ex: sinks on exterior walls where they are more exposed to the elements, typically no basements, insufficient insulation, etc.) so when we have an abnormally powerful cold front pass through, it wreaks havoc.
I imagine there may be other areas in the south that are also unprepared for this particular type of issue. If the incidence of abnormally cold weather is increasing, then perhaps that explains some part of the increase in these types of claims.
UPDATE: There was a significant data coding error in this analysis. In some of the Insurance Information Institute tables, the position of "wind and hail" and "water" is flipped, so some of the values got put in the wrong columns when I copied the data into a spreadsheet.
After correcting this, "water damage" is still responsible for a large chunk of the increase in expected losses (around a third), but now wind and hail damage is responsible for the largest portion (around half).
This is still somewhat confusing, since loss ratios are down in most wind and hail-prone states, but it's now confusing in a different way.
I wonder how you could add number of washrooms per household, as well as the percentage of homes with dishwashers, as well as fridges with icemakers/water dispensers over time to see if it is sinply the increased amount pf plumbing causing this? More plumbing per house is more chances for something to fail.
Anecdotally, the most common home insurance claim in people I know is either a dishwasher or water equipped fridge leaking.
This is a good suggestion.
I live in the south and the insurance claims I'm aware of are mostly air conditioning drains getting blocked and leaking.
Those are exactly what came to mind for me as well. I’ve had a roof blow off during a storm myself, but most other water related problems I have seen or experienced are small things that are hard to notice till they do massive damage, like leaking appliances.
are insurance carriers leaving your state because of HVAC?
I wonder if some of it is just the aging housing stock. We had a huge construction boom in the '60s to early '70s, and then tapered off, and haven't really ever gotten back to building at the rate we did back then, certainly not relative to population. A ton of the housing stock in cities and inner-ring suburbs is like 50-100 years old. My own house was built in 1940. I'm not sure whether the pipes that it had when we moved in were original, or something that had been put in around the '60s-'70s. But they were galvanized crap that had corrosion inside that had narrowed the pipes down to like a quarter the original diameter. We replaced _almost_ all of it fairly early on -- and then one of the few parts we hadn't gotten to caused a leak, which led to some annoying repair work. (Though not quite enough that we bothered to file an insurance claim, because we save some money on our premium by having a relatively high deductible.)
The electrical system definitely was original -- knob and tube wiring, with the cotton insulation mostly flaked away. _And_ they had blown in foam insulation over that. And then the air return to the ancient gas furnace had been run under the house, supported by a wooden frame, which termites ate. So when we moved in, there was NO air return to the furnace. It's truly astonishing that the homeowner died of natural causes, rather than carbon monoxide poisoning or a fire. He was the original owner of the house from 1940. Died in his home at age 97, having done a ton of unpermitted, low-quality work on it... At this point the plumbing, electrical, and HVAC in the house are _all_ new, there's nothing left of what was here before we bought the place in 2017. Also the whole roof -- rafters and all. I think we've spent as much on improvements, as we have on the downpayment + mortgage payments. :-P
I would have guessed this spiked during the water bed craze of the 80's and 90's.
As I understand it, there are monitoring systems that can be installed to detect water leaks, but I don't believe they are common. Maybe it would be in everyone's interest if this changed, either through incentives or mandates (if indeed they work).
Are insurance carriers leaving your state because of water damage from dishwasher or refrigerator?
I have to ask, given the payout/damages vs. the impact to rates, why the heck anyone would even file such a claim unless they've been gone for a month and come home to a subfloor delaminating and joists already sagged.
I'll bet mold claims are built into water damage. This was a non existent problem until fairly recently. Now every homeowner is scared to death of "toxic" mold. No matter that mold spores are present virtually everywhere and are not active until a certain level of humidity is reached and go dormant once humidity falls again. As a remodeling contractor I had many conversations with hysterical homeowners about some little moldy or just damp area that was exposed during demo. They pretty much all wanted to call in specialists in "mitigation" - incredibly expensive experts who basically spray some bleach around and run some dehumidifiers. Because it was on their dime they usually passed but if insurance was paying for it you know it would be turned into a huge deal.
This is a good suggestion.
And mitigation/remediation costs are now built into the insurance claim industry. Having briefly worked on that dark side, boy howdy is it rife with grift and overspending. Any water event immediately results in deployment of extraction equipment, air scrubbers, dehus, drywall, flooring and insulation removal and testing, testing, testing. And then there's gray water. A reported toilet overflow will result in a remediation bill of $5-10K easily. Look at the massive expansion of mitigation contractors in the past 10 years - the game that is played with Xactimate to maximize the cost of mitigation/reconstruction is a big driver in premiums. The profit expectations are triple what is expected in new construction or remodeling. I did reconstruction for a year and would never do it again because I felt so dirty.
Multifamily property owner here. I agree completely. Remediation contractors charge $175/day for a dehumidifier that costs less than $1,000 new. Labor rates and hours have also risen significantly. I assume insurers pass the buck because they can push the costs to insureds, although I've lately seen more pushback from insurers.
Being recent doesn't mean it's all fake. I mean, I too had my doubts until I read this:
https://buildingscience.com/documents/insights/bsi-027-material-view-of-mold
Very interesting stuff and I will say I agree with most or all of it. I live in California where controlling humidity is not much of a problem. It's dry in the summer and more humid in the winter so heating lowers the relative humidity and that controls any moisture accumulation indoors. I think the author(s) have a realistic approach to mold - it will never be eliminated but can be controlled and kept dormant by controlling humidity levels.
The analysis adjusted for home size, but I think home quality is also a thing - nicer features and higher ceilings, which is reflected in increased home cost. A cursory Google search shows increased home prices over time, adjusted for inflation. Insuring a more expensive product is more money. Is the insurance increase proportional to increased home valuations? I like the per capital graphs, but I also want to see a graph of per home cost. Otherwise, a great blog. Thanks for writing.
This is definitely part of it. Think of an "average" bathroom, or kitchen from the 50s or 60s, compared to what they look like and contain now. The average quality has gone up considerably over the last several decades.
the cost of reconstruction is higher because of higher cost in materials and labor
Need to look at “reinsurance” as the transmission mechanism through which losses in one State are spread to policyholder premiums in other States. Rates are set state by state but embedded therein are the costs of reinsurance which generally are priced based on a diversified portfolio of underwritten risks.
Not sure if I missed this in the analysis of costs, but what about overhead, underwriting costs and cost of capital (e.g., all the non-claim back-end costs)? The analysis here seems to focus on (1) cost to consumer, (2) profit/net income and (3) claims (by number and value). Not sure whether this was evaluated and dismissed as negligible, but seems worth flagging.
Caps on profitability typically pay minimal heed to increases in costs (and 5% profit on 100B is a lot better than 5% of 10B from a C-suite level). Modern corporate structuring is pretty good at being able to avoid recognition of net income, and acquisition-based growth can soak up any amount of excess cash flow.
Relatedly (and I know this is not really a focus for this substack), is there any indication on how much M&A has occured in the insurance market? Cursory glance indicates a fair amount (consistent with most other sectors in the US).
I think factors related to overhead and underwriting costs are mostly screened off by just looking at losses specifically, which (I think) don't include overheads, and at a national level loss ratios are pretty constant.
Are you referring to an insurance company's cost of doing business? This article seemed to refer to profits rather than gross income so business costs would already have been factored in.
So the thesis here would be "white collar rent-seeking and employment bloat sucking up money" as in basically every other field of endeavor?
I wonder if newer sheathing and siding systems are more likely to lead to losses due to water damage. Brick and plaster can both absorb substantial amounts of moisture without failing while newer systems are better at keeping water out but are perhaps less resilient to water incursion once it happens?
Conversely, maybe I missed this but do we account for the aging of the housing stock here? Presumably older houses get more water damage.
That was exactly my thought! Our subdivision was built in the 1980-1990s. Many of us are debating when to repipe our homes—an expensive and disruptive endeavor. It’s hard to tell when pipes may fail, and the monitoring technology to catch it early has problems, too. So maybe pipes fail due to age and lack of proactive replacement?
I’m skeptical of this though—it feels like adjusting for construction cost should capture this effect? (Homes depreciate, this should cause insured value to go down assuming constant construction costs) Similarly I could see this increasing insurance cost as a proportion of total structure value but not on an absolute basis.
Hm, but that could still cause the damage percentage to skew towards water damage. e.g. say a 20 year old house is twice as likely to get water damage as a 10 year old house but has depreciated away half its value. Then on average you'll pay out the same amount in water damage (you pay out half the amount to twice as many houses). But you'll only pay half as much for fire or storm damage (houses don't become more likely to get in a wildfire as they age). So you'll get a data artefact where it looks like water damage is accounting for a larger percentage of insurance costs as houses age
(and this can get messier - maybe fires actually get more common, but not enough to offset this effect, so as a percentage of damage costs water damage is what's going up, but the cause of the increase in total costs is still the increase in fires).
I was responsible for underwriting and pricing across the US for an extremely large company until about 20 years ago, when I retired. I guarantee you that if you talk to someone in underwriting or pricing at a large carrier that they can tell you exactly what is going on. My guess is that the severity of water claims is going up due to rising deductibles (small claims are weeded out) and the change to nicer quality wood flooring and such. A leak on tile or vinyl is inconsequential, to a nice wood floor it might be tens of thousands. That is just a guess though, as I have no contact with that world any more.
. On the subject of home ownership and insurance companies I have been reading this book entitled “the vast machine” by Paul edwards. After reading this I started thinking is the reason why insurance companies are skeptical of climate change is that their belief based on the “historical data vs computer modeling” debate?
Wouldn't the first place to look be the value of the property insured?
This would be good to look at, though my rough expectation would be that the other factors I've looked at (such as construction costs) would mostly account for this.
Exactly, I mean why look beyond the insured value.
Only the value of the building, not the value of the land.
Yes. That's the way hazard insurance works
Amazing post ! Very informative and really appreciate the amount of work that went into this. Wanted to note that the mouseover for the scatterplot of "Loss ratio vs per capita premium increase" isn't rendering properly.
Roger Pielke J. has extensively examined and critiqued NOAA's billion dollar disaster database.
No one in my area ever pays to replace their roof shingles. You can always find a roofing contractor who will work directly with your insurance company and say that you have hail damage that should be covered by insurance. I don’t think this was common 20 or 30 years ago. It feels very sketchy to me, but it’s how it works here. There’s a different roofing company doing work in my subdivision every couple of months. They go door-to-door and ask if they can use their drones to inspect your roof for damage for free. I would think it’s driving up insurance premiums. For reference, I live in a suburb of Atlanta.
Roofing material manufacturers (and vinyl floor companies) change their pattern by a fraction of an inch every three years so if your roof is over three years old the roofer will automatically claim the roof must be replaced because they can't match materials for the repair.
Look at the increasing regulations and zoning issues, which I believe are the significant reason costs are rising. You live in a house that’s 30 years old and need to rebuild with heat pumps and no gas appliances, necessitating larger electrical systems (you may have to put an EV hookup n the garage, even if you don’t drive an EV)…
I suspect you are correct. Note though, the updated codes are intended to address design issues that have caused previous insurance claims. Theoretically, future claims should be reduced by codes changes making houses safer and longer lasting. Likewise, the gas appliance issue is meant to address climate change which we already know is a major driver of insurance costs.
How has climate change been proven as a link to increasing insurance costs? That’s proven and unprovable…
My son-in-law works for a weather consulting company and they are predicting an increase in the severity of weather events. Insurance companies are pricing policies using those predictions.
I should be more precise. Climate has been changing since the beginning of Earth (where are those dinosaurs anyway). What is unproven and unprovable is man is causing it. So, wise people would manage the outcome by clearing brush, filling reservoirs and just plain not building in fire (or flooding or hurricane) prone areas. But, nah…
Clearing brush around houses but not in the forest. Part of our wildfire problem is that fires need to happen and we prevented that for a couple of decades. Small fires vs big fires.
No, the climate has not changed with this speed. I'm not a climatologist but 96% of those scientists believe humanity has significantly affected the speed at which warming is occurring. Plants, animals and society need time to adapt to changes in weather. When it goes too quickly in either direction, animal and plant species die and human settlements suffer. If every house in Pacific Palisades had been updated to current codes the loss would have been dramatically reduced but that takes time. One of the big questions is how we will deal with changing crop conditions. Ancient Egypt fell because of this. Even today, 90% of the US population exists where it rains, at least until California enter this sustained drought.
My wife was an automotive claims adjuster for several years and trained in claims, loss ratio, accounting set asides. 1970s. She points out one are you missed.
Insurance pushed higher deductibles, and that is a forcing function for the insured to NOT make a claim.
A. They don't want to pay the highdeductible.
B. This limits more smaller claims to be hidden from the Insurance companies and...this data
C. Therefore only larger more catastrophic claims are more often made than small claims
D. Policy holders also do not want their existing policy increased because of a small claim. Insurance underwriters will risk adjust their premium. The policy holders benefit is reduced or goes negative applying for claims marginally above the deductible.
Wouldn't this be reflected in lower probability of claims? So net payouts should be decreasing but we see the opposite for at least water damage.
I had a 1/2" copper knuckle freeze on a house in Michigan while we were away. We were new to it. It was a cold water supply to a useless humidifier in a 2nd floor AC closet. Ran for a day or 2.
Finally a neighbor called and asked if I wanted our water shut off? Why I asked?
It was flowing out the front door. Catastrophic. Destroyed everything from the attic insulation, all walls. Wood flooring.
Water damage is something you can't live with for long. Carpet, cellulose based materials.
Mold.
Bummer.
Sure. And that sounds pretty awful, expensive, and disruptive. And irrelevant. Anecdote != Data.
Texas here; massive insurance claims were filed here in 2021 for flooding caused by freezing pipes. Homes in Texas are not typically constructed to prevent pipes from freezing (ex: sinks on exterior walls where they are more exposed to the elements, typically no basements, insufficient insulation, etc.) so when we have an abnormally powerful cold front pass through, it wreaks havoc.
I imagine there may be other areas in the south that are also unprepared for this particular type of issue. If the incidence of abnormally cold weather is increasing, then perhaps that explains some part of the increase in these types of claims.