Over the past two years, many successful individuals and families moved to new homes, often from a large city to a smaller one or a medium-sized city to a rural area to gain more space or seek a different lifestyle. According to a recent Chubb study, many of these individuals also remodeled their homes to include spaces for offices and gyms, or bought secondary homes as getaways. When people move into new homes or renovate existing homes, they often face new and different risks. According to Chubb's Fifth Annual Homeowner's Risk Report conducted in November/December 2021, homeowners may not be taking adequate precautions to protect themselves when buying or renting a home, and many continue to ignore the risks associated with owning, renting or renovating. Armed with the survey's data, insurance agents and brokers can talk to their clients about the actions they can take to protect their homes and help prevent property damage before it happens. What follows are a few important insights from Chubb's Fifth Annual Homeowner's Risk Report and advice for agents and brokers on how they can use this information to succeed in today's competitive marketplace. |

Sight unseen

The threat of higher interest rates and a shortage of homes on the market may be causing people to take a risk and purchase or rent a home without ever setting foot on the property. Chubb's 2021 survey results reveal that 25% of U.S. and Canadian homeowners and renters have purchased or rented a home sight unseen, and 20% have considered it in the last year or two. Knowing that individuals purchasing or renting homes sight unseen are taking a significant risk compared to buyers who visit and inspect the house or apartment beforehand, agents and brokers have an opportunity to talk to their clients about the importance of home inspections and understanding prior losses on the home before signing papers. New homeowners should make sure any past issues were fixed completely and won't lead to additional losses or repairs in the future. For instance, Chubb claim statistics show that a home that had a prior water loss is twice as likely to suffer a second water loss in the future. |

Secondary homes

Chubb research also showed that many people are purchasing vacation or secondary homes to enjoy time away. Specifically, 35% of those surveyed purchased a second home in the past year, with 77% of those buying for their own use. While a vacation home is a great place to relax and gather with family, these homeowners live elsewhere most of the time. That means they may face additional risks simply because they're not around to catch or prevent minor issues before they lead to a major problem. To help prevent losses in second homes, agents and brokers can talk to their clients about preventative measures such as installing water shut-off devices throughout the house or designating someone to check on the property when the homeowner is away for long periods of time. |

Water losses top property-damage causes

Ongoing research shows that water damage is all too often an overlooked risk. In fact, 45% of all interior property damage is caused by water. Such losses are happening more often than fire and burglary, according to Chubb claims data. And the number of losses is only increasing. The survey revealed that nearly half of U.S. homeowners (44%) have experienced water damage in their home in the past one to two years, compared to 27% in 2020. The seemingly overlooked risk of water damage is not only significant (the average interior water claim payout is more than $50,000, according to Chubb claim data) but also, to an extent, can be preventable. Whenever possible, agents and brokers should encourage their clients to install water shut-off devices in homes or point-of-leak sensors in condominiums or apartments to help prevent water leaks from causing major damage. It is also effective to share stories about the inconvenience of water damage, as clients will typically need to be out of their homes for an average of three months for water damage repairs, according to Chubb claims experience. |

Naïve to renovation risks

Instead of purchasing a new home, some homeowners are opting to renovate their existing house. Our survey showed that over one-third (35%) of U.S. and Canadian homeowners and renters embarked on home renovation projects in the last year. While losses due to water damage are also prevalent in remodeling projects, renovations may expose the homeowner to additional risks, such as mistakes caused by contractors or the homeowners themselves. Our survey showed that 35% of homeowners and renters want to hire a contractor to take on a home renovation in the next year — such as a bathroom overhaul or living room refresh — and 34% prefer to manage their own DIY renovation. While you might not think that renters can renovate, minor projects are often acceptable with the landlord's consent, especially if the renovation will increase the property's value over time. To help ensure the remodel goes smoothly, agents and brokers should talk to their clients about either hiring a reputable contractor who will create a written plan that outlines the details of the project or have the homeowner develop a detailed plan themselves. Having insurance to cover the home and the project is also important, as losses can happen during the renovation process, and insurance coverage may be compromised if the insurance company is not informed when renovations are planned. In addition, since the value of a home can increase considerably after a major renovation, it's smart to reevaluate the level of insurance on the home to ensure that it is properly covered. |

Talk to your clients

Agents may also want to consider discussing the benefits of having the client's entire insurance program managed by one agent. If the agent is aware of all properties — and any renovations that are in the works or may happen in the near future — they can better assess risks and help manage exposures. This includes properties that the client may have paid for with cash. Without a mortgage, they may need a reminder to purchase insurance. As successful individuals and families move to new homes or renovate existing ones, agents and brokers have an opportunity to connect with their clients, help them understand the risks they face and ensure that they have the right amount of coverage to protect what could be one of their largest investments. To learn more, visit: www.chubb.com/water. Mary Parsons ([email protected]) is Sales & Distribution Leader at Chubb Personal Risk Services. See also: |

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