Separate water damage deductibles have become more common in the commercial property insurance market over the last few years. These deductibles can apply to both weather and non-weather-related water damage events.
Aging infrastructure: Older structures with aging pipes, appliances, and fixtures are more prone to leaks and bursts, leading to increased water damage incidents.
Weather-related events: Extreme weather events, including heavy rain, freezing temperatures causing burst pipes, and snowmelt, are becoming more frequent and intense, contributing to a rise in water damage claims.
Extensive damage: Water can quickly spread and seep into various materials, affecting walls, flooring, insulation, and even structural elements of a structure, requiring complex and expensive restoration efforts.
Hidden damage and mold growth: Water damage can lead to hidden issues like mold growth, which requires specialized remediation and adds significantly to the overall repair costs.
Premium adjustment: Offering higher deductible options allows carriers to adjust premiums downward.
Increased reinsurance prices: Insurance companies themselves purchase reinsurance to manage their risk, and reinsurance prices are rising in response to the growing frequency and severity of weather-related disasters.
Before 2020: Water damage deductibles usually matched the property deductible.
2020–2024: Insurers increasingly added higher, separate deductibles for water damage.
2024–2025: These deductibles are now common across both standard and specialty markets.
As a property owner or operator, separate water damage deductibles change how you manage both your risk and your budget:
Plan for higher out-of-pocket costs: If a claim happens, expect your water damage deductible to be higher than for other types of losses.
Focus on prevention: Regular plumbing inspections, leak detection systems, and pipe insulation can go a long way in avoiding costly incidents.
Review your policy carefully: Make sure you understand your water damage deductible, how it applies, and how it compares to your overall property deductible.
Water damage is now a leading driver of insurance claims, and insurers have adapted by adding separate deductibles. For property owners, the key is preparation: understand your coverage, budget for potential costs, and invest in preventive measures to minimize the risk of water damage in the first place.