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Commercial water damage can occur from a number of sources. Corroded pipes can burst, defective or improperly installed fittings can leak, and heating systems can fail - and all l of these can result in major non-weather-related water disasters.

Read Our Commercial Water Damage Case Studies

While any business can suffer from a burst pipe, those with increased risk and the most to lose are typically in commercial real estate (especially high-rises), and in the hospitality and health services industries. It’s critical to understand the risks and safeguard your interests with mitigation measures and the appropriate business insurance to cover you against water damage.

  1. A $4 million AUD loss, right before launch

    A new technology project was scheduled to be developed, manufactured, and launched when a frozen pipe burst and destroyed key hardware and a critical development lab. Restoration of the lab took almost a year, and alternative lab space had to be outsourced to reduce schedule delays. In total, the business interruption resulted in a loss of $4 million AUD.

     

    Commercial water damage risks aren’t always visible

    Interior corrosion can be an underlying cause of the pipe defects that make them more susceptible to bursts.

    nearly a whole year of business interruption


  2. Major leak costs business $8.5 million AUD

    The failure of a pressure relief valve coupling in a multi-tenanted high-rise caused water to flow from the 16th storey all the way down to the basement. In just an hour, this caused total loss of main electrical bus risers, as well as damage to suites, offices, elevators and interior features in the building, which took six months to repair. The total loss came to $8.5 million AUS.

     

    Even small leaks can cause extensive damage

    950 litres of water per day can leak from a 5mm pipe crack.



  3. $5.2 million AUD in damage from hotel’s faulty fitting

    A pipe reducer fitting failed on a water supply line in the 18th floor riser room of a recently-renovated high-rise hotel/apartment complex. Water damage spread to 65 units in the building, as well as to hotel common areas, corridors, the main lobby, electrical risers, and almost all elevators. Lost income and costs associated with rents for displaced tenants and limited hotel room availability totaled $5.2 million AUD.

     

    Taller and high-value buildings are more at risk
    There is a documented increased incidence in leaks and burst pipe events from taller and high-value buildings.

    one leak 65 units damaged

  4. Hospital patients suffer water emergency
    When a pipe burst on the upper floor of a medical building, over 750,00 litres of water cascaded onto several floors below. The incident resulted in the transfer of hundreds of patients — including infants — to neighbouring hospitals. It took a full year to repair the damage, and led to a loss of over $5 million AUD.

    Protect your business against commercial water damage
    Understand the risks of water damage — and be ready if it ever happens to your business with a proper preparedness plan and the right business insurance.

    Not all pipes are created equal
    Plumbing industry data indicates that “they don’t make pipes like they used to” — new pipe quality is often inconsistent.

     
  5. HVAC flood leads to lost production cycles
    One threaded coupling on an HVAC-connected water supply line failed in a pharmaceutical manufacturing plant. This caused over 45,000 litres of water to flood the active ingredient manufacturing area, 10 clean rooms, and special equipment. Production cycles were lost during the extensive clean up and re-validation per regulatory guidelines, costing $5 million AUD.

Regularly service your HVAC
Because 75% of heaters fail before they are 12 years old, it’s important to replace them regularly to avoid the risk of commercial water damage.

seventy-five percent of HVACs fail by age 12

Disclaimer: This information is descriptive only and is brought to you by Chubb Insurance Australia Limited (“Chubb”) as a convenience to readers and is not intended to constitute advice (professional or otherwise) or recommendations upon which a reader may rely. Chubb makes no warranty or guarantee about the accuracy, completeness, or adequacy of the content. Reference in this content (if any) to any specific commercial product, process, or service, and links from this content to other third party websites, do not constitute or imply an endorsement or recommendation by Chubb and shall not be used for advertising or service/product endorsement purposes. All products may not be available in all jurisdictions. Coverage is subject to the language of the policies as issued

This content is brought to you by Chubb Insurance Australia Limited (“Chubb”) as a convenience to readers and is not intended to constitute advice (professional or otherwise) or recommendations upon which a reader may rely. Any references to insurance cover are general in nature only and may not suit your particular circumstances. Chubb does not take into account your personal objectives, financial situation or needs and any insurance cover referred to is subject to the terms, conditions and exclusions set out in the relevant policy wording.  Please obtain and read carefully the relevant insurance policy before  deciding to acquire any insurance product. A policy wording can be obtained at www.chubb.com/au, through your broker or by contacting any of the Chubb offices. Chubb makes no warranty or guarantee about the accuracy, completeness, or adequacy of the content. Readers relying on any content do so at their own risk. It is the responsibility of the reader to evaluate the quality and accuracy of the content. Reference in this content (if any) to any specific commercial product, process, or service, and links from this content to other third party websites, do not constitute or imply an endorsement or recommendation by Chubb and shall not be used for advertising or service/product endorsement purposes. ©2021 Chubb Insurance Australia Limited ABN: 23 001 642 020 AFSL: 239687. Chubb®, its logos, and Chubb.Insured.SM are protected trademarks of Chubb. Published May/2021.