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  • Writer's picturePerceptive Things Team

How to Prevent Dropped Insurance Coverage Due to Water Leaks

Without water damage insurance coverage, the high average restoration cost would ultimately come out of your pocket.

Unfortunately, many building owners are learning firsthand that insurers can suddenly drop your insurance. A report from the California Department of Insurance shows that over 200,000 insurance policies were dropped in 2020!

Although there are many reasons an insurance company may drop your water damage insurance coverage, you can easily prevent dropped insurance.

Keep reading to learn our 4 tips for preventing dropped insurance due to water leaks! At the end of this post, we will also share some common reasons that insurance companies deny claims and drop coverage.

1. Install a water leak detection system

Using a water leak detection system to detect water leaks early ensures you reduce the occurrence of water damage and the possibility of losing insurance coverage.

We saw above that the key reasons for dropped insurance are frequent and severe water damage claims, neglect of preventive measures, and building in high-risk areas. Installing water leak detectors can help avoid the occurrence of the mentioned issues.

However, it is vital to install the water leak detection system in the right places, depending on whether it is a multi-family or commercial building.

While many water leak detectors are on the market, you may want to check our best water leak detection systems to discover your ideal option.

Below we share some information on our 3 water leak sensors!

The Droplet Solo™ water leak sensor

We recently reintroduced our first-ever water leak sensors, the Droplet Solo™, with a fresh new design!

Forget about the hassle of external wires and meticulous surface adhesion—simply drop it in place for hassle-free installation.

Powered by a single CR24505 battery with a 4 to 5-year lifespan, the Droplet Solo™ combines efficiency and economy. With an industrial-grade IP-67 rating, this single-point wireless sensor delivers reliable performance under fixtures, appliances, and mechanical equipment.

The Droplet Duo™ water leak sensor

Droplet Duo™ is a dual-probe sensor that gives instant wireless alerts within seconds of sensing any water leak or moisture. It is easy to install and set up as it comes pre-configured for your building. Besides, it includes 3M adhesive pads, making it easy to attach to any surface.

This powerful water lead detector is powered by a durable lithium battery lasting up to 4-5 years. This makes Droplet Duo™ a reliable and perfect solution for detecting water leaks in buildings without needing frequent battery replacements.

The Droplet Pro™ water leak sensor

Droplet Pro™ is an industrial-grade detector that efficiently detects water leaks even in the harshest environments. For instance, the impressive IP-67 rating allows the Droplet Pro™ to be immersed in water up to 1 meter deep.

This water leak detector has a 3-meter rope to detect leaks along its entire length. You can even customize this length up to 100 meters. It also features internal magnets, making installing on iron surfaces and beams easy without needing extra installation tools or hardware.

Moreover, its long-lasting lithium battery provides durable and reliable water leak detection without needing frequent battery replacements.

2. Regularly check and maintain your building's plumbing system

Every part of your building, whether it is a multi-family building or commercial building, must be in good condition. If not, water can leak through roofs, walls, or floors, resulting in water damage.

As a result, your water damage insurance companies may find you guilty of making frequent or severe water damage claims or neglecting preventive measures.

Property Casualty 360 reports that about 2,700 frequent and severe water damage claims were recorded in North America in 2020 alone, mostly caused by poorly maintained buildings and plumbing systems.

We suggest maintaining and keeping your building and plumbing systems in good condition to prevent your water damage insurance from being dropped due to negligence.

3. Train Your Staff on Response Procedures and Warning Signs

While water leak sensors should be your first line of defense, it is still important to train your team on how to respond!

You may consider drafting a standard operating procedure for responding to water leaks. This should include everything from emergency numbers (such as a mitigation service) to the basics of tenant communication (such as how frequently they should be updated).

You may also want to teach them the key warning signs of water leaks that may not be detected by sensors. Obvious signs include mold growth on ceilings and window ledges, but there may also be some common issues that are specific to your building or location.

4. Learn Your Insurance Policy's Terms and Conditions

Of course, it is never fun to have to comb through the terms and conditions of anything! Unlike signing up for social media, it is not enough to just click "agree" without looking when it comes to insurance.

That being said, there are a few key reasons you might find your claim being rejected and your insurance dropped.

Below we will cover some of the common reasons. You will find that they closely mirror our tips on avoiding dropped insurance coverage due to water leaks from above!

Frequent or Severe Water Damage Claims

According to Insurance Europe, water damage insurance companies often assess risks according to the previous claims history. For instance, if a building owner has a history of filing severe or frequent water damage claims, the insurer may decide to drop your insurance coverage. This is because the building is at a higher risk of experiencing future water damage incidents.

However, we are not suggesting that you stop filing legitimate claims. Just remember that the fewer claims you file, the more attractive you become and the lower the risks to insurance underwriters. On the other hand, the more claims you file, the more unattractive you become and the higher the risk to insurers.

For most insurance companies, filing more than three claims within three years will lead to the insurer increasing the premium to offset the perceived high risks or deciding to drop the insurance coverage.

Neglect of Preventative Measures

According to society insurance, building owners are required to take proper preventive measures to avoid the occurrence of water damage.

If you fail to implement necessary preventive and maintenance measures, such as installing water leak detectors, fixing water leaks promptly, or contacting regular plumping inspection, the insurance company may categorize it as negligence.

For instance, insurance is meant to repair or restore water damage due to unforeseen causes, not water damage caused by negligence.

Therefore, the lack of proactive measures to maintain and prevent water leak damage can lead to dropped insurance.

Your Property Located in a High-Risk Area

The risk of insuring a building for water damage in a certain location can change over time. According to, this may include dropping all the policies in such high-risk areas.

For example, if your building is located in areas at a high risk of natural disasters (fires, hurricanes, flooding, etc.), then insurance companies may not cover these types of issues. They simply would not be able to afford to stay in business if they did! Either that or they would pass along the cost to the policyholder, which would likely result in unrealistic payments.

Failure to Make Payments on Time

Failure to make insurance payments on time is considered by the Department of Financial Services as one of the key reasons to find your insurance coverage dropped.

An insurer is required by law to alert their customer before dropping a policy for non-payment. So, when you make late payments, the insurer will notify you of rescinding the dropped insurance.

All this back-and-forth, each time you make late payments, is a costly administrative burden to the insurance company. Needless to say, insurance companies either pass this cost along to the consumers or drop them completely!

Dishonesty and Fraud

This is perhaps the most serious reason to have your water damage insurance dropped. Insurance works on the principle of good faith and honesty by both the client and the insurer.

According to the National Association of Insurance Commissioners, "Insurance fraud occurs when an insurance company, agent, adjuster or consumer commits a deliberate deception in order to obtain an illegitimate gain."

From exaggerating your claims to purposely destroying property, many actions can get you into trouble. In some cases, dropped coverage would be the least of your concerns as insurance companies can also decide to pursue you legally for false claims.

Final Thoughts on Preventing Dropped Insurance Due to Water Leaks

Insurance claims are vital in restoring water damage. That is why it is so important to make sure you maintain your insurance coverage!

Fortunately, installing a water leak detection system at the right places inside your building can help prevent dropped insurance due to water leaks.

We hope this blog has guided you through preventing dropped insurance due to water leaks. If you have unanswered questions, contact our experts at for assistance.

Do you have unanswered questions about preventing dropped insurance due to water leaks? Or need professional help installing water leak detectors? Let us know via the comments section below!

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