Insurers Brace for Cold Weather Claims

Though summer weather is associated with devastating catastrophe losses, the winter season can be equally busy from a claims perspective.

The third-largest cause of catastrophic losses behind hurricanes and tornadoes, winter storms resulted in almost $26 billion in insured losses between 1991 and 2010, the Insurance Services Office (ISO) reported.

Fires, burst pipes and traffic accidents lead the losses during the cold winter months.

While nearly one third of all residential fires occur during the winter, the greatest number of home candle fires happens on Christmas Day, according to the National Fire Protection Association (NFPA).

“Many fires occur when holiday decorations, such as centerpieces, come into contact with a lit candle,” said Marty Ahrens of the NFPA.

Winter house fires can also start from too many holiday lights plugged into an outlet, portable heaters or fireplaces left on all night.

“According to the U.S. Fire Administration and the National Fire Protection Association more than 100,000 structural fires causing more than $1.7 billion in damage occur during the winter months,” said Malcolm Stone, director of marketing and communications for Paul Davis Restoration Inc. “The number one cause is cooking, with heating being the second most common cause.”

“Fires are common from lots of overloaded electric cords and more use of candles,” said Tracy Bachtell, senior vice president of business development for Paul Davis. “Turkey fryers cause a great number of fires and injuries. Furnace puff backs can often cause fires with first time use of furnaces during the colder months, same with space heaters.”

According to the NFPA, U.S. fire departments respond to more than a thousand fires annually in which a deep fryer in involved. The NFPA says deep fryer fires result in more than $15 million in property damage each year.

“Wood burning stove losses were popular in the ’70s and ’80s, but fewer are being used today,” Bachtell said.

Fires aren’t the only losses associated with the winter season.

“Other common losses occur from frozen pipes and ice dams, if the winter comes early,” Bachtell said.

According to the Insurance Information Institute (III), water damage and freezing was the second most claimed homeowners’ loss between 2005 and 2009.

“The most common type of loss is water damage due to burst pipes that are not properly insulated from the cold,” Stone said. “The damage from these types of losses can be significant, especially … if it occurs in an unoccupied vacation home or rental property.

“Ice dams are another typical loss that occurs during winter,” Stone said. “However, the effects usually go unnoticed for weeks or months afterwards. This damage occurs when water freezes and thaws several times during the winter. The melting water runs down to the edge of the roof and freezes creating an ice dam. Additional water has nowhere to go and is forced down into the walls of the home – damaging dry wall and insulation.”

Of the most common losses encountered during the holiday season, Bachtell says most are repairable. “Water, soot and smoke require emergency response to repair. Time causes more damage. Most smoke is acidic, so time is critical on these losses,” he said.

According to Stone, in the case of water damage due to a pipe burst, the water is what the industry calls category 1 or “clean” water.

“Obviously, carpet, padding and flooring get wet along with furniture, clothing and other household furnishings”, Stone said. “It is not uncommon for the water to ‘wick-up’ dry wall. In these cases, most of the damage is reparable without replacing building materials or contents.

“For fire losses, most burned or scorched building material and contents must be removed and replaced. However, materials and items damaged by smoke and soot can be cleaned and deodorized,” Stone said.

The effects of the winter season are not limited to commercial and residential property claims. Adjusters may see a rise in auto, workers’ compensation and liability claims, such as slip and fall injuries, especially in certain regions of the United States susceptible to inclement weather.

According to the National Research Council, bad weather-related driving conditions are associated with 7,000 fatalities, 800,000 injuries, and more than 1.5 million vehicular crashes annually in the United States.

Topics USA Carriers Profit Loss Claims