2005 Insurance Reference Manual

Personal Insurance Federation of California Insurance Reference Book

Increasing Water Loss Claims Driving Force Behind Higher Homeowners Insurance Rates

Rising household water damage claims have evolved into the leading cause of homeowners insurance rates in California - costing billions of dollars and contributing to a tightened homeowners insurance market. Below are some key facts about water loss claims in California and the impact on the homeowners insurance market:

Water Loss Claims More than Double in Last Five Years:

In 1997, water-related claims paid by insurers representing two-thirds of the market totaled $224 million. By 2001, the amount more than doubled to $496 million , according to the Insurance Information Network of California (IINC).
California insurers paid more than $2.3 billion for household water damage claims between 1997 and 2001.
Water related claims comprised roughly one-third of all California homeowners insurance claims filed in 2001, according to IINC. For some insurers, water claims represented as much as 40% of all claims payments, far exceeding traditional claims like fire, theft, liability and weather-related claims.

Text Box: Did you know?? In 1997, the average water claim filed in California cost $2,537 to repair. In 2002, the average water claim cost increased 186% to $4,730. Remediating Water Loss Claims More Costly Today:

In 1997, the average water claim filed in California cost $2,537 to repair. In 2002, the average water claim cost increased 186% to $4,730.
The increase in water claims can be attributed to many things. Consider:

The average home in California once had only one bathroom, but today homes average two or three.
Washing machines used to be located on the first floor or basement, but today many are located on the second or third floor.
Standard carpet and linoleum have been replaced with more costly hardwood and tile options.

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