Discussions of threats to buildings often focus on damage due to fires, floods, or windstorms. However, insurance companies point to plumbing system failures as another common driver of property losses. According to guidance published by leading insurers like AIG and Chubb, damage from leaking or burst pipes ranks among their most significant claims. The consequences extend far beyond repairing damaged piping. Pipe failures can disrupt operations, displace occupants, damage sensitive equipment, interrupt revenue, and require months or even years of recovery.

Insurance industry analyses demonstrate that damage originating from plumbing is far from an isolated problem. Chubb estimates global losses from pipe failures at approximately $1.2 billion per year in non-weather-related damage. The company’s commercial claims data show an average damage loss of $89,000 and says claims of more than $1 million have risen dramatically.

Similarly, AIG analyzed nearly 3,800 commercial claims over a four-year period and found approximately 34% of all reported claims involved non-natural-peril damage from plumbing, making it the largest single category of property claims. More importantly, burst or leaking pipes accounted for 42% of water damage claims and 45% of the total dollars lost from water damage events.

A series of loss incidents illustrate how quickly relatively small plumbing failures can become multimillion-dollar events, including

• A burst pipe at a manufacturing facility that destroyed a product development laboratory, resulting in $3 million in business interruption losses.
• The failure of a plastic fitting on the 20^th floor of a college housing building that sent water cascading down to the 8th floor. The event displaced students and caused at least $1 million in losses.
• A failed domestic water fitting damaged 18 floors of a 32-story hotel, leading to $4 million in losses.
• An allegedly faulty 6” CPVC pipe installed below the hot-water tank of a convention center caused major flooding and over $6.9 million in damages.

Insurers have concluded that proactive risk management is essential to reduce their exposure. Their approach includes these three elements:

1. Acknowledging the prevalence of plumbing-related risks
2. Conducting risk assessment and mitigation planning
3. Using leak-detection technology to identify leaks before they become catastrophic losses.

Pipe failures rarely make headlines until they displace hundreds of occupants, disrupt operations, and/or shut down businesses. When specifying pipes, architects, engineers, building owners, and facility managers should weigh managing risk over minimizing first-cost construction. Selecting resilient materials, monitoring maintenance, and installing leak detection all reduce long-term threats to buildings. Insurers have begun to push for recognizing plumbing-related risks to reduce the losses they see every day.