What do most popular homeowner insurance claims have in common? Answer: They’re preventable, with preparation and client engagement.
The biggest cause for home insurance claims is acts of God, with the top five claims for insured homes including damage caused by wind and hail, water, frost, and fire, according to data from the Insurance Information Institute. While we can’t necessarily control Mother Nature, there are ways to mitigate some of the damage and, ultimately, prevent claims.
At 2.1 claims per 100, wind and hail damage takes the prize as the most frequent claim for insurance agents, according to the Insurance Information Institute. The average claim comes in at just over $10,000. Incidents related to water damage or frozen pipes fall not far behind, with the average claim for those issues coming in at approximately $10,500.
Kelly Greene, a risk consulting manager for Chubb Personal Insurance, says that, “Homeowners are six times more likely to suffer property losses from water than from theft and seven times more likely than from fire.” Yet, fire damage is arguably the costliest, with the average claim just under $69,000.
For most families, these claims take a major toll on their financial stability. Loretta Worters, vice president, media relations, says that water damage alone accounts for nearly $1 billion a year in losses.
With so many confined to their homes amid the coronavirus pandemic and challenging economic times looming, it is more important than ever to take a proactive approach to home safety in an effort to avoid unexpected expenses.
A recent survey vipHomeLink commissioned with Kelton found that nearly half of homeowners admit their homes need some TLC. Of those homeowners, a quarter admit they simply forget to do things that need to be taken care of around the house, while another 24% lack confidence in understanding their home’s maintenance needs.
This presents an opportunity to educate homeowners on how they can proactively protect their largest investment and, in turn, reduce the risk of needing to file an insurance claim.
From falling trees and high winds to fire and hailstorms, some of the most frequent claims insurance agents receive could have been prevented. Insurance carriers and agents value those homeowners who take the necessary steps to prevent and protect their homes, so it is important to engage with homeowner clients on a regular basis—made easier with modern technology solutions—and arm them with more awareness and a handy list of preventative tips:
1) Trim the trees. A tree next to the home can be aesthetically pleasing, but it can also do serious damage. While getting it removed altogether can be considered, trimming any branches that are touching the home or near power lines is a must. Getting rid of dead branches helps a tree grow stronger and healthier.
2) Bring in the reinforcements. Farmers Insurance shows that there has been an average increase of 12% in claims related to hail damage since 2013. Having shutters on windows is important to protect them, especially for those who live in an area prone to hailstorms. Have homeowners make sure storm shutters are securely fastened and in good shape.
3) Get smart with technology. A small leak in the pipes can go from a drip to a disaster before you know it. Thankfully with today’s technology, there are devices to help stop water damage before it starts. For just a few hundred dollars, devices allow homeowners to not only monitor the usage of water within the house, but also automatically shut off a home’s water supply when the device detects a change in water pressure caused by a leak.
4) Let the water flow. During frigid months, homeowners can be reminded to let faucets served by exposed pipes to trickle. While it may increase the water bill slightly, the running water can help prevent pipes from freezing and ultimately bursting.
5) Install and upkeep fire alarms. Sensitive alarms, such as those triggered by cooking, can result in homeowners removing the batteries from their smoke alarms or dismantling them altogether. This can have deadly consequences in the event of a home fire, so regularly remind homeowners to install at least one alarm on every level of the home, near all sleeping areas and inside each bedroom. Testing them once a month is a great way to engage with homeowners and prevent home fire claims.
Smoke alarms are the first step every homeowner should take in their home, but it is a method of detection—not prevention.
6) Consider sprinklers. The stats do not lie when it comes to just how important a sprinkler system is. According to the National Fire Protection Association’s Sprinkler Initiative, sprinklers lower the home fire death rate by 81% and reduce the average property loss rate by 71%. Less damage to the home means lower and fewer claims.
Taking these simple steps can drastically reduce the homeowner’s chance of damage and avoid costly claims. By leveraging new technology applications specifically designed to improve engagement with policyholders, today’s insurance agents have a great opportunity to increase client engagement—with non-billing and non-claim interactions—by communicating about prevention, home safety and building home awareness.
Sharing home safety content through social media channels with policyholders also helps drive engagement and reduces home claims long term, positively impacting both clients and the insurance agent.
Geoffrey Martin is cofounder of vipHomeLink; Paul Chadowski is vice president of ecosystem development of vipHomeLink.