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Understanding escape of water risks: Protecting UK commercial property investments

March 12, 2025

Understanding Escape of Water Risks: Protecting your commercial property investments

As a commercial property owner in the UK, safeguarding your investment involves more than just maintaining the physical structure; it requires a keen awareness of potential risks that could impact your bottom line. One such significant risk is the escape of water (EoW), which has become a prevalent issue in both residential and commercial properties.

The prevalence and cost of Escape of Water Incidents

Escape of water refers to incidents where water leaks from plumbing systems, appliances, or other internal sources, leading to property damage. These incidents are not only common but also costly. In 2022 alone, the UK witnessed a staggering £987 million worth of claims related to EoW incidents in both residential and commercial buildings.¹

Breaking it down further, insurers are disbursing approximately £1.8 million daily to address damages caused by water leaks.² This escalation in both the frequency and severity of EoW claims can be attributed to various factors, including aging infrastructure and increased property complexities.

Impact on Commercial Property Owners

For commercial property owners, the ramifications of an EoW incident extend beyond immediate repair costs:

Financial Strain: Repairing water damage can be exorbitant, with some commercial loss claims exceeding £1m.³
Operational Disruptions: Water damage can render parts of a property unusable, leading to business interruptions for tenants and potential loss of rental income.
Increased Insurance Premiums: Frequent or severe claims can result in higher insurance premiums, impacting the property’s profitability.
Property Value Depreciation: Persistent water damage issues can diminish the property’s market value and deter prospective tenants or buyers.

Case Study: The Financial Toll of Water Damage

Consider a scenario where a commercial property in London experiences a significant water leak due to a burst pipe. The incident leads to extensive damage across multiple floors, affecting several businesses. The direct costs of repairs and replacements amount to £500,000. Additionally, the affected businesses face operational downtime, resulting in lost revenues and potential claims against the property owner for disruption. Consequently, the property’s insurance premiums rise, further straining the owner’s finances.

Mitigation strategies for property owners

To protect your investment and mitigate the risks associated with EoW incidents, consider implementing the following measures:

Regular Maintenance: Conduct routine inspections of plumbing systems, appliances, and roofing to identify and address potential issues before they escalate.
Install Leak Detection Systems: Modern leak detection technologies can provide early warnings of leaks, allowing for prompt intervention and minimizing damage.
Educate Tenants: Ensure that tenants are aware of the signs of potential leaks and understand the importance of reporting issues promptly.
Review Insurance Policies: Work closely with insurance providers to ensure that your policy adequately covers EoW incidents and that you understand the terms and conditions.
Implement Preventative Measures: Consider installing automatic shut-off valves and moisture sensors in high-risk areas to prevent extensive damage.

Conclusion

Escape of water incidents pose a significant threat to the financial health of commercial property investments in the UK. By understanding the potential risks and implementing proactive measures, property owners can safeguard their assets, ensure tenant satisfaction, and maintain the profitability of their investments.