Insurance professionals often focus on headline risks such as fire, theft or extreme weather when assessing potential losses. Yet a quieter, less obvious danger is quietly climbing the claims table, costing insurers and construction firms far more than many realise. This emerging threat is hard to detect, often preventable, and has the potential to cause significant financial and operational disruption if left unaddressed.
Leading intelligent water management platform Quensus has highlighted this gap between perceived and actual risk, warning that many companies remain blind to it despite the severe losses it can cause.
Quensus managing director and founder Dan Simmons said, “If insurers were asked to rank what they see as the most costly damages they could incur, you would expect factors like ‘weather’, ‘fire’ and ‘theft’ to sit high up the table. But industry data shows the value of Escape of Water (EoW) claims – i.e. water leaks – is by far greater than anything else claimed.”
The impact of unmanaged water risk is particularly pronounced on construction sites. Water damage can lead to losses totalling hundreds of thousands of pounds, even where insurance cover is in place, and can cause significant project delays. According to Quensus, two in every three construction sites without a real-time water monitoring system will report water-related damage, underlining how exposed sites can be without proactive controls.
Cracking the code to a solution
In response to rising losses, the Fire Protection Association, working with industry stakeholders, published a new Joint Code of Practice (JCoP) last August, focused on managing and preventing EoW on construction sites.
The code aims to help “reduce losses associated with EoW events and subsequent project delays”. Its overarching objective is to encourage companies to identify and mitigate water risks early, rather than responding once damage has already occurred.
The JCoP covers water management across both pre-construction and construction phases, addressing plumbing systems, water storage, testing and quality assurance processes. It is now widely recognised across the construction industry and is frequently included in contracts, meaning companies are increasingly expected to demonstrate compliance. For insurers, adherence to the code is becoming an important indicator of effective risk management.
Technology is central to meeting these expectations. Modern water management systems combine sensors, flow meters, valves and software platforms to monitor usage continuously. These systems can issue immediate text and email alerts when unusual patterns are detected and automatically shut off water supplies, particularly outside working hours or in the event of serious incidents. This capability supports JCoP compliance while helping to limit damage, repair costs and insurance claims.
More advanced platforms use artificial intelligence to improve detection accuracy. Traditional leak detection relies on permanent thresholds, which are poorly suited to construction sites with highly variable water usage. AI-driven systems instead apply dynamic thresholds that learn normal consumption patterns over time, adapting to different times of day and days of the week. By analysing usage data over several weeks, these platforms can distinguish genuine leaks from legitimate activity, reducing false alarms and improving effectiveness as the system continues to learn.
However, Quensus stresses that technology alone is not enough. Effective EoW prevention requires a comprehensive management plan that includes proper installation, staff training and clearly defined procedures for responding to alerts. Ongoing monitoring and record-keeping through central dashboards are also critical. When these elements are aligned, outcomes improve significantly, with data showing that only one in 10 construction sites using a monitoring system will suffer water damage.
For insurers and the wider InsurTech sector, escape of water represents both a significant challenge and a clear opportunity. By supporting the adoption of smart water management systems and JCoP-aligned practices, insurers can reduce claims frequency and severity. Over time, this approach could help push water-related losses down the claims table and improve resilience across the construction and property insurance markets.
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