Valve failure caused water damage to 16 floors of a high-rise office building

A major water leak was reported when a pressure relief valve coupling failed on the 16th floor of a 21 story multi-tenanted office building. The water flowed for at least an hour, from the 16th story all the way down to the basement, causing extensive damage to the electrical feeds on most floors. Water damage occurred on numerous floors wreaking havoc on suites, mechanical and electrical rooms, offices, and elevators. The main electrical risers were a complete write-off and would take months to replace. Carpeting was totally destroyed on most floors. Business interruption lasted approximately 6 months and the total loss was $9.5 million.

Massive water leak in hotel complex damages 18 floors

A pipe reducer fitting failed on the domestic water supply line in the 18th floor riser room of a 32-story hotel, causing a massive water leak. The building, containing hundreds of guest rooms and apartments, had recently undergone renovations. Over 65 apartments were damaged from the water, as well as building common areas, corridors, the main lobby, electrical riser rooms on 18 floors, and almost all elevators. The total loss amounted to $5.8 million due to lost income associated with rents for displaced tenants and limited hotel room availability during the period of restoration.

* These claims’ scenarios serve only as examples and all claims will be evaluated on a case-by-case basis.

Water Damage Preparedness and Mitigation

Risk assessment and mitigation, together with a comprehensive emergency response plan are key elements of a water-damage risk-management plan.  

A thorough risk assessment must include identification of potential water leak sources, an evaluation of site-specific features (e.g. the presence of basement areas or sensitive equipment) which contribute to the risk of water damage and an assessment of risks arising from operations/processes being undertaken at the site.  

Once the water damage risk assessment has been completed, the next step is to implement precautions to mitigate risks identified during the assessment process. These precautions will typically include the implementation of site management procedures such as enhanced inspection programmes and physical controls such as the installation of leak detection equipment. It is important to ensure that both facility and business management support and actively promote the plan. A coordinator should be given responsibility for implementation of the response plan.

The preparedness or mitigations measures required will, of course, need to be customised based on the water damage exposures identified during the risk assessment process.  However, some common risk mitigation measures to consider are as follows:

• Establish procedures to promptly notify key staff and contractors when issues arise.
  

• Establish formal contractor management procedures to mitigate the risk of unintended water leakage. This should include the review of the proposed scope of work, verification that the required systems have been correctly isolated, notification of all affected parties and verification of work completion prior to de-isolation of affected systems.
  

• Authorise and train key employees at least annually on how to shut down and isolate systems in an emergency event.
  

• Undertake regular inspections of the building roof area, exterior walls, below grade areas and drainage infrastructure. Promptly investigate and resolve any minor issues or blockages. Ensure high risk areas and equipment are included in any regular security patrols.
  

• Undertake regular inspections of building equipment and piping systems such as sump pumps, water leak detection equipment, water service plumbing, hot water systems, fire hydrant and sprinkler systems, etc.
  

• Periodically inspect flexible hoses and their coupling connections. Replace all hoses within the manufacturer’s recommendations, even hoses that appear to be functioning normally.
  

• Install leak detection and/or automatic shutdown devices in susceptible equipment rooms, within or around HVAC units, laundry units, kitchens, bathrooms, hot water heaters, and other high sensitivity or susceptible areas. Install water level sensors and alarms in any drainage sumps.
  

• Attach identification tags to critical valves, indicating what portion of the system they control.
  

• Assemble emergency supply “spill control kits” equipped with materials to mitigate damage from escaped liquids in key areas of the facility.
  

• Develop and implement effective leakage response procedures to ensure prompt notification, isolation/containment and clean-up of any leakage. Formal and documented training should be provided to all security, facilities, and property management staff at regular intervals.
  
  

The water-damage risk-management plan should be reviewed, tested and updated annually. This process should include testing the effectiveness of management procedures and engineering controls.

Chubb Risk Engineering Services

Chubb has a team of dedicated risk engineers who can assist clients with their water damage risk exposures and risk management plans. 

For more information, please contact Risk.Engineering.AU@chubb.com