If your builder’s risk policy has become more expensive and more restrictive, you’re not imagining it.
Water damage has officially surpassed fire as the leading cause of construction insurance claims, accounting for 30% of all builder’s risk payouts and $16 billion in losses annually in the US alone. And insurers have decided they’re done absorbing costs for events that could have been prevented.
That shift in insurer posture is changing the math on water risk management. It’s no longer just about avoiding a bad day on the job site. It’s about protecting your margins, your coverage, and your ability to bid competitively.
Water risk has shifted from an operational nuisance to an underwriting variable.
I recently hosted a fireside chat with Cheri Hanes, VP and Head of Construction Innovation and Sustainability at AXA XL, and David Simpkins, Director of Engineering and Technology at Polygon US, to discuss how water risk is reshaping construction and insurance.
Here are five practical insights you can apply immediately.
1. Stop evaluating water management technology on its cost. Evaluate it against your deductible.
Most developers look at a water management system and ask the wrong question. The question isn’t “what does this cost?” It’s “what does it cost me to carry my current deductible exposure unprotected?”
That distinction matters more than it used to. A few years ago, water damage deductibles on builder’s risk policies commonly sat at $25,000 to $50,000. Today, first-incident deductibles of $150,000 to $250,000 are standard. Repeat claims can exceed $1 million. Some carriers are declining coverage entirely for firms with a history of water-related losses.
Cheri Hanes put it, “Insurers no longer want to pay claims for events that modern technology could have prevented.” Water damage is now firmly in that category. The message from the market is clear: if you want protection, you need to first demonstrate prevention.
An insurance-backed water management system with a performance warranty can cap deductible exposure at $10,000. If you’re carrying $250,000, the system pays for itself before it prevents a single incident.
Takeaway: Before your next project, do three things:
- Pull your current builder’s risk policy and find your water damage deductible, not the headline number, but the water-specific sublimit.
- Ask your broker whether that number has moved in the last two to three years and where it’s heading.
- Evaluate any water management technology not against its sticker price but against that deductible number.
2. Own the risk early or it won’t get managed
The biggest barrier to effective water risk management on construction sites isn’t technology. It’s ownership. And most developers are unknowingly creating the problem themselves.
Common breakdowns include:
- Requirements pushed to mechanical contractors who don’t hold the policy
- No clarity on who pays
- No clear enforcement from the policyholder
- Systems purchased but never deployed
- Overly complex workflows that field teams ignore
Water monitoring requirements routinely get delegated down to mechanical contractors or plumbers who have no visibility into the builder’s risk policy and no context for what’s at stake. They receive a requirement without the context to execute it properly.
The result, as David Simpkins of Polygon observed, is monitoring technology sitting unused in boxes in the site trailer. Purchased, deployed nowhere, protecting nothing. Meanwhile the developer, who holds the policy and absorbs the deductible, has no idea the system was never turned on.
Developers have the authority to make water risk a first-class agenda item in pre-construction, not an afterthought passed down the chain.
As I shared: “Be involved. Even if you want to run water management through the mechanical contractor’s budget, be involved, because they need to know what is at stake and what level of protection is required.”
Takeaway: Get your GC, risk manager, MEP contractor, and insurer’s risk engineering team aligned before construction begins, not after the first incident forces the conversation. Early alignment between the developer, GC, MEP contractor, and insurer’s risk engineering team changes what gets built into scope and budget.
Additionally:
- Choose systems that require minimal manual input
- Avoid duplicate data streams that create confusion
- Ensure integration with existing reporting tools
Ease of use is what determines whether the system actually gets used in the field.
3. Budget for water management at design, not construction
One of the clearest themes from the discussion was this: if mitigation technology is introduced mid-build, it competes with everything else in the budget. If it is included during preconstruction, it becomes a scoped requirement. Most projects still get this wrong.
By the time a project is underway, budgets are locked and trade scopes are set. Introducing water management at that stage means someone has to give something up, and it usually loses.
As I see it, technology should not compete with project budget. If you build it into pre-construction budgeting, just like you budget for concrete or steel, it’s simply a line item.
The financial case for early inclusion is stronger than most developers realize. A system specified at design can be sized correctly, integrated cleanly with MEP scope, and structured to carry through from construction into occupancy, so you’re not buying one system for the build phase and a separate one for operations.
Takeaway: Water management belongs in the owner’s project requirements alongside fire protection and structural specs, before design is complete. If it’s not in the requirements at that stage, it will either get value-engineered out or land on the mechanical contractor’s desk without the budget or authority to execute it properly.
4. Choose detection with automatic shutoff
Buying a water monitoring system is easy. Deploying one that actually prevents loss is harder. The difference usually comes down to two things: accuracy and automatic shutoff.
If a system generates constant false alarms, site teams stop responding. They don’t uninstall it. They just stop reacting. At that point, it’s not reducing risk. It’s creating the illusion of protection.
That’s a system design issue.
Most traditional leak detection relies on static thresholds. Static threshold systems – if flow exceeds X, send an alert – can’t distinguish a burst pipe from a toilet flush from normal overnight usage. Set the threshold low and you get constant noise. Set it high and you miss real events. Either way, site teams learn to tune it out.
From what I’ve seen in the field, static thresholds lead to either constant false alarms or missed leaks.
Advanced, AI-powered water intelligence detection systems, like Wint, solve this by learning each building’s actual water usage patterns and detecting anomalies against that baseline. That makes it possible to distinguish a slow leak from a burst pipe from normal usage, and dramatically reduce false alerts. That’s what makes site teams trust the system, and respond.
The second thing to look for is automatic shutoff, the capability that actually limits loss. If your protection depends on someone seeing a notification after hours, deciding it’s real, and dispatching a response, you are still exposed to a six-figure event. Automatic shutoff eliminates the gap entirely, stopping flow at the source the moment a real anomaly is confirmed, whether it’s 2pm on a Tuesday or 2am on a Saturday.
Takeaway: When evaluating water mitigation, ask:
- How does the system reduce false positives?
- Does it learn building-specific behavior?
- Does it automatically shut off water without waiting for human intervention?
5. Use water mitigation to strengthen your insurance position
Most developers approach water risk defensively. The goal is simple: avoid a claim, protect the deductible, stay on schedule. That’s the right instinct. But it leaves value on the table.
Developers who can demonstrate structured, credible, documented water mitigation don’t just reduce their exposure. They show up differently in the conversations that determine their cost of risk and access to capital.
Cheri Hanes was clear about how AXA XL looks at this. Risk engineering teams aren’t impressed by reactive cleanup plans. They’re looking for evidence of prevention, including documented processes, deployed technology, and defined ownership. Firms that can show that enter renewal discussions from a stronger position than firms that can’t.
That strength doesn’t always appear as a visible line-item discount. But it shows up where it matters:
- Coverage availability on complex project types
- Deductible negotiations at renewal
- Carrier appetite for high-value builds
- Long-term insurability as your claims history evolves
In some cases, engineered systems backed by insurer performance warranties can change the structure of the policy itself, not just influence it at the margins.
And this isn’t just about insurance.
Institutional investors, development partners, public agencies, and sustainability stakeholders are all paying closer attention to operational risk. In a market where losses are rising and carriers are more selective, disciplined prevention signals competence. It tells capital providers that you manage risk proactively, not reactively.
Takeaway: Don’t treat water mitigation as a back-end safety measure. Document it. Lead with it in underwriting discussions. Include it in how you present your risk profile to investors and capital partners. The window to get ahead of this is still open, but it’s narrowing. Carriers are formalizing their expectations, and the firms that build prevention into their standard operating procedures now will hold a structural advantage over those that wait for a mandate to force the conversation.
The bottom line
The developers and contractors doing well in this market have made a simple shift. They don’t treat water damage as something that just happens. They treat it as a risk they can measure and manage. They plan for mitigation during design, stay involved through implementation, choose systems their teams will actually use, and use their prevention efforts to strengthen insurance and capital discussions.
Water mitigation now plays a real role in coverage terms, deductibles, and long-term insurability. In a market with more scrutiny, disciplined prevention shows you run a tight operation.
At Wint, we built the platform specifically for this shift in how water risk is evaluated. We combine advanced anomaly detection with automatic shutoff at the source, and our system is backed by an HSB/Munich Re performance warranty, helping developers turn water risk into a predictable cost.
To learn how Wint can help your team reduce water damage risk, lower insurance costs, and protect project timelines, visit wint.ai.
