The winter storm that knocked out power for millions amid frigid temperatures and spawned a rash of water-related disasters is expected to be the costliest weather event in Texas history. More than a week after the storm began on February 11, a third of Texas residents continued to experience power service disruptions, millions lacked ready access to safe water, and scores were displaced after frozen pipes burst, causing widespread flooding and rendering many structures uninhabitable.
The storm has also exacted a grim death toll: by February 21, at least 58 individuals in its path had lost their lives to hypothermia, carbon monoxide poisoning and other causes.1 That number is expected to rise.
“It is a terrible tragedy,” said Bill Gatewood, Corporate Senior Vice President, National Personal Insurance Practice Leader, Burns & Wilcox, Detroit/Farmington Hills, Michigan. “Without a doubt, it is a catastrophe of historic proportions.”
Because the storm affected all 254 counties in Texas, early estimates suggest damages could exceed the record $19 billion in insured losses attributed to Hurricane Harvey in 2017.2 As of February 22, one insurer had received almost 29,000 claims3 and the Insurance Council of Texas predicted hundreds of thousands more would be filed.4
“The current loss estimates of $15 to $20 billion are extraordinary,” Gatewood said. “For a winter storm to be the costliest weather-related event in Texas history is astonishing, given the number of major hurricanes that have hit the state. The number of insurance claims related to this winter storm could even be the highest in the history of the U.S., by quite a margin.”
Water damage: Expensive and time-intensive to repair
The devastating consequences of water damage are all too familiar to property owners across the U.S. and Canada. Millions of Texas homeowners are contending with the fallout from burst pipes—standing water, sewage backups, soaked drywall and ruined belongings—coupled with uncertainty about when repairs will be possible, given the shortage of contractors.5
Water is an extremely destructive element when it goes where it isn’t wanted. It does considerable damage to a home and homeowners are often displaced for extended periods while repairs are completed.
A single inch of water can cause $25,000 in home damages, according to the Federal Emergency Management Agency (FEMA),6 and water damage claims overall run about $10,900 on average.7
“Water is an extremely destructive element when it goes where it isn’t wanted,” Gatewood said, pointing to the possibility of mold, structural damage and an often lengthy and stressful rebuilding process. “It does considerable damage to a home and homeowners are often displaced for extended periods while repairs are completed.”
While even a minor water leak can cause major damage, the dramatic leaks plaguing so many Texas homeowners stem from frozen pipes splitting open. Videos shared by residents show water pouring through ceilings, collapsing drywall and drenching carpet and hardwood floors.8 In this type of situation, Homeowners Insurance can help with the cost of repairs, damaged belongings and loss of use, including hotel fees or temporary rent payments while homeowners are displaced.
“Generally, most homeowners will have some amount of Homeowners Insurance coverage to help with costs to repair frozen pipes,” Gatewood explained. “Some policies may have a water sublimit, where the insurance is only going to pay up to a certain amount, and others may have a separate deductible for water.”
Home water losses are on the rise, in part due to an increase in the number of water lines running through the average home. Today’s homes often include multiple bathrooms, dishwashers, upper-level laundry appliances and refrigerators with water dispensers and ice makers. “When just one of many water lines in a home starts leaking, it can create significant damage,” noted Gatewood.
Water detection systems help head off costly disasters
Experts have reported climate change is escalating the frequency and intensity of weather events around the world.9 A record 50 billion-dollar weather events occurred across the globe during 2020,10 including 22 U.S. disasters with damages totaling $1 billion each.11 In Canada, 2020’s severe weather events came at a cost of $2.4 billion to Canadian insurance companies, making it the fourth costliest year for insurers since 1983.12 As weather events worsen, the homeowner’s role in mitigating losses takes greater prominence.
Freezing temperatures can lead to burst pipes, which can lead to catastrophic water damage.
“Unfortunately, water loss is not something that is going to go away but it is something we can get better at preventing, especially during times of big weather shifts like the freezing temperatures we recently experienced in Texas,” said Jamie Wells, Account Manager, Flo by Moen, Burbank, California. Flo by Moen is a smart water shutoff device built to monitor homes for potential water leaks. “Freezing temperatures can lead to burst pipes, which can lead to catastrophic water damage.”
When a water monitoring and shut-off device, like Flo by Moen, is installed on a home’s water service line, it automatically shuts off the home’s water supply if a catastrophic leak is detected. The device can also sense when water is flowing outside of its known normal usage. In Austin, officials reported 325 million gallons leaked out of its water system overnight on February 16; the city’s average daily usage is about 100 million gallons.13
In a recent study done in conjunction with LexisNexis Risk Solutions,14 Moen found that homes with the Flo system reduced claim frequency by 96 percent and the severity of claims by 72 percent. While water detection systems cannot entirely remove the risk of leaks, they can significantly reduce and even eliminate the hassle, stress and monetary impact of a full-blown water loss, Gatewood pointed out.
“Water shut-off devices can greatly reduce the risks involved with all of the water running through the average home,” he said, noting that installing such a system could mean discounts on Homeowners Insurance.
While severe weather and power outages are beyond their ability to control, homeowners can take advantage of monitoring technology to help reduce the impact of such events.
Flo by Moen is available to homeowners with Burns & Wilcox policies at the starting price of $350—available to ship within the United States. “The Flo system is an inexpensive investment, given its potential to help homeowners realize massive savings in the form of reduced water damage,” Gatewood said.
“While severe weather and power outages are beyond their ability to control, homeowners can take advantage of monitoring technology to help reduce the impact of such events,” he said. “Water monitoring and shut-off devices are appropriate for all homeowners, and are more technologically advanced, effective and affordable than ever before.”
Review insurance policies to avoid coverage surprises
On February 22, Texas officials announced that residents in over 100 counties could apply for financial help from the Federal Emergency Management Agency (FEMA).15 Homeowners must first file claims through their existing insurance policies and are not eligible to receive payment for the same damages twice. For those whose Homeowners Insurance policies include separate deductibles or lower limits for water damage, the out-of-pocket repair expenses may come as an unwelcome surprise.
“It is vital that homeowners understand what they are buying,” Gatewood emphasized. “For those of us in the insurance industry, the worst thing that can happen is if a customer is surprised at the time they file a claim.”
The industry has a responsibility to help its customers understand their available insurance options and existing coverage, Gatewood said. “However,” he noted, “homeowners also owe it to themselves to ask questions and make sure they understand what they are buying.”
He stressed that water loss claims could make it more difficult to obtain Homeowners Insurance in the future. “This is due to the enormous impact of non-weather water claims on the property insurance market,” Gatewood said.
“Homeowners should ask their insurance brokers about ways they can help reduce their loss risks, better protect themselves and become a desirable risk for insurance companies,” Gatewood advised. “By doing so, they can save money on insurance premiums and spare themselves the heartache of going through repairs and restoration after water damage.”
Systems like Flo by Moen can help homeowners avoid the harsh reality of expense and loss from a catastrophic water leak. I think those who have faced water damage would likely recommend others do whatever they can to prevent it.
While a long recovery is ahead for many Texans, their plight serves as a reminder to homeowners everywhere of the substantial risks posed by unexpected weather events and water intrusion. In addition to taking precautions such as installing water detection systems, replacing outdated rubber hoses and regular maintenance, homeowners can review their Homeowners Insurance policy proactively and educate themselves about the particulars of their coverage.
Even the smallest investment of time and resources can offer sizeable returns, Wells added. “Systems like Flo by Moen can help homeowners avoid the harsh reality of expense and loss from a catastrophic water leak,” she said. “I think those who have faced water damage would likely recommend others do whatever they can to prevent it.”
1 McDonnell Nieto del Rio, Giulia; Fausset, Richard; and Diaz, Johnny. “Extreme Cold Killed Texans in Their Bedrooms, Vehicles and Backyards.” New York Times, February 19, 2021. Updated February 21, 2021. 2 Yates, David. “ICT estimates Hurricane Harvey insured losses at $19B.” Southeast Texas Record, September 15, 2017. 3 Robertson, Sebastian. “Winter storm thaw brings record number of insurance claims in Texas.” WFAA-TV, February 22, 2021. 4 Larned, Tori. “Hundreds of thousands of insurance claims predicted in Texas in coming weeks,” ABC 24 Austin. KVUE, February 23, 2021. 5 Clark, Kevin. “Texas homeowners with broken pipes, other damage face contractor delays.” KXAN, February 20, 2021. 6 Federal Emergency Management Agency. “The cost of flooding.” United States Department of Homeland Security. 7 Metz, Jason. “Homeowners Insurance For Burst Pipes And Water Leaks.” Forbes Advisor, February 19, 2021. 8 “Texas TikTok users share nightmare videos of water pouring from burst pipes.” Fox 8 High Point. WGHP, February 17, 2021. 9 United States Environmental Protection Agency. “Climate Change Indicators: Weather and Climate.” November 9. 2020. 10 Masters, Jeff. “World hammered by record 50 billion-dollar weather disasters in 2020.” Yale Climate Connections, January 25, 2021. 11 Frank, Thomas. “Billion-Dollar Disasters Shattered U.S. Record in 2020.” Scientific American, January 11, 2021. 12 Cousins, Ben. “Severe weather events cost Canadian insurers $2.4 billion in 2020.” CTV News, January 18, 2021. 13 Miller, Ryan W. “Millions of gallons have leaked from burst water pipes in just one Texas city: 'That is an incredible amount of water.’” USA Today, February 18, 2021. 14 LexisNexis Risk Solutions. “Preventing Water Claims: Understanding the Value of Smart Home Technology.” Flo by Moen, 2020. 15 Mena, Bryan. “Here's how Texans can apply for federal help to recover from the devastating winter storm.” Texas Tribune, February 22, 2021.