Claims for water damage fewer, costlier

Water causes nearly a half-billion dollars of insured damage inside California homes each year, according to a continuing study by the Insurance Information Network of California. The number of household water damage claims is on the decline, but the average cost of water claims continues to climb.

The 81,518 claims reported by the companies surveyed resulted in $428.5 million in insured losses in 2003, the first decline in costs since water claims data became available in 1997. Overall 2003 losses for the industry are projected at more than $500 million.

The survey tracked water claims from 1997 through 2003 for companies representing 68% of California’s homeowner insurance marketplace.

Despite the overall decrease in claims cost, the average water claim reached $5,256 in 2003, more than double the $2,484 average water claim in 1997. The average cost per claim rose each year during the survey period. Remediation and construction costs are largely faulted for the high cost of water claims.

The survey also found that water-related claims made up 30% of all California homeowners insurance claims filed in 2003, despite the increase in claims prompted by wildfires. Other common homeowner insurance claims include fire, theft, liability, wind and lightning.