As the rapid growth of condominium living in Canada continues, corporations and their suite owners need to be on alert for an omnipresent danger: water damage.
According to Statistics Canada, the share of condominiums among newly built dwellings has increased five-fold since 1980 with as much as 30 per cent of residents in cities like Vancouver and Toronto residing in condos by 2016. For condos housing hundreds of residents, easily addressable leaks of some form can occur at any given moment, whether from a leaky faucet, drain, or appliance. As buildings age, however, there is increased risk of more significant leaks and floods that can result in considerable water damage.
A KPMG study for the Canadian Institute of Actuaries highlights two primary areas of concern related to the increase of property damage claims: the rise of people living in condominiums and aging infrastructure. Many condo residents reside in late-twentieth century buildings that grapple with underlying plumbing and mechanical systems reaching or surpassing their estimated useful life.
The Autorité des marchés financiers in Quebec identified water damage as the leading cause of insurance claims, while internal data from Aviva Insurance found water damage claims doubled over a ten-year period ending in 2012.
While residential home and commercial owners reported 40 per cent of insurance claims being related to water damage, the share for condos is between 60 per cent and 90 per cent, according to KPMG’s study. Unlike in single dwellings where the impact is limited to that home, leaks in condos can become more substantial and widespread.
Sprawling water damage
Even mid-size condos often have more than 100 suites, all with their own set of appliances, plumbing fixtures, and HVAC systems. A broken washer, or leak in the fan coil or vertical heat pump of a suite on the ninth floor, can impact suites several floors below.
Recent news reports of sprawling water damage in Canadian condos have illuminated troubling causes such as faulty gaskets, frozen pipes and plumbing failures, all of which impacted multiple units.
Just as condo corporations and suite owners need to cautiously maintain their plumbing and appliances, proactive maintenance of in-suite HVAC systems is also critical. The Canadian Institute of Actuaries, Chubb Homeowners Study, and the Privilege Underwriters Reciprocal Exchange all identify in-suite HVAC systems as a leading area of concern for water damage. Looking at fan coils, for example, here are some of the ways leaks and floods can occur:
1. Over time, drain pans rust and corrode, potentially creating holes for water to escape.
2. Deteriorating insulation within the fan coil cabinet can lead to debris falling into and potentially clogging the drain pan, drain hose, and condensate lines.
3. When turned off for extended periods of time during the winter, the pipes and coils can freeze and burst, leading to significant water damage.
4. As risers expand and shrink throughout the year, considerable strain is placed on the valves which can lead to leaks and cracks over time.
Water damage claims climb
As water damage claims rise exponentially, insurers are taking note. The BC Financial Services Authority reports that in 2020, insurance premiums for strata (condominium) corporations in the province increased by about 40 per cent while a Deloitte report on B.C.’s insurance market found water damage deductibles increased by 135 per cent.
According to a 2021 Home Insurance Price Index published by LowestRates.ca, condo insurance rates for suite owners also increased, with year-over-year increases in Ontario, Alberta, and B.C. of 8 per cent, 23 per cent, and 34 per cent respectively, all while residential home insurance rates decreased.
To get water damage claims and rising insurance premiums back under control, corporations and suite owners need to take preventative measures. Unfortunately, while the damages can be catastrophic, adequate in-suite care remains low.
A 2019 Chubb Homeowners’ Risk Survey found that only 20 per cent of homeowners completed even a single water-related risk mitigation activity, and only 19 per cent completed regular inspections of their HVAC systems. In truth, this is more an issue of awareness rather than purposeful neglect. A lack of knowledge was among the principal reasons for inattentiveness, highlighting the need for increased guidance so corporations and suite owners can use preventative measures to strengthen their protection.
Educating communities about risks
Evidently, education is the key to getting ahead of the curve. In addition to actively maintaining plumbing and mechanical systems under its purview, a corporation should take an active approach to educating its community on the need for each suite owner to properly maintain their appliances, plumbing, and in-suite HVAC systems.
Many suite owners are unaware of simple, yet vital, safety tips like keeping their HVAC systems running while on extended absences. Corporations can share knowledge and best practices through notice boards or interactive displays, newsletters, general meetings, and welcome packets provided to new owners.
Corporations should also raise awareness for necessary maintenance, repair, and retrofit work where needed. Semi-annual maintenance services for fan coils often include the removal of debris and water tests for clogs and leaks. Modern components like flood sensors and automatic shut-offs can be added to older plumbing and mechanical systems as helpful safeguards.
Corporations can engage the original equipment manufacturer to provide condition assessments of aging equipment and estimate its remaining useful life.
In aging buildings where a complete retrofit is the best course of action, owners should be alerted to the risks of inaction before it’s too late.
Ultimately, while the risk of water damage is pervasive, so too are the preventative solutions. And through increased knowledge, shared community awareness and due diligence, many of the risk factors of water damage can be avoided.
Ayman Ashebir is currently the director of sales at Unilux CRFC Corporation. He can be reached at firstname.lastname@example.org / Company Website: www.uniluxcrfc.com