Act Now to Prevent Frozen Water Pipes

Freezing weather can bring the unexpected, from slippery sidewalks and ice dams to one of the most common problems—frozen water pipes. Knowing what conditions can cause pipes to freeze is the first step to prevention. If pipes do freeze, a quick response can keep them from bursting, avoiding the expense of replacement, possible water damage to walls, floors and electrical systems, or even a business shutdown.

According to the Insurance Institute for Business & Home Safety (IBHS), 37% of all frozen pipe failures occur in a structure’s basement. What’s more, pipe insulation to keep water pipes from freezing in the first place costs much less than the price of repairs.

IBHS recommends these prevention steps for businesses:

Interstate notes that pipes are most likely to freeze in Connecticut, Maryland, New York, Ohio and Pennsylvania and that a 1/8 inch crack can cause the loss of 250 gallons of water per day and damages from $2,000 to $100,000.

According to Interstate:

If pipes freeze, Interstate recommends:

  • Turn off the water flow using the main water valve
  • Inspect the pipe carefully for cracks or damage
  • Consult a plumber for advice, if you find cracks or signs of damage (also be sure to consult a professional if you aren’t sure which pipe is frozen and/or you are unable to inspect it)
  • Thaw the pipe gradually using a hair dryer or space heater
  • Confirm the pipe has thawed by turning the main water valve back on and making sure that water flows
  • Take steps to raise the temperature in the area where the pipe froze or insulate the pipe


  • Use a blow torch or open flame to thaw a frozen pipe – open heat sources can cause fires and other safety hazards
  • Stand in water while you are operating an electrical heater, dryer or any appliance—you could be electrocuted

Flurry-Down Economics: The Real Cost of Blizzards

Winter Storm Juno New York City

Despite predictions of a “historic” snowstorm this week, the Northeast – and the insurance industry – largely dodged the blizzard bullet. Over the past 20 years, winter storms have caused an average of $1.2 billion in insurable losses every year, the Insurance Information Institute reported. Last year’s polar vortex and significant snow accumulations came with a price tag between $15 and $50 billion, and winter weather caused $3.7 billion in overall losses, of which an estimated $2.3 billion was insured, according to MunichRe.


Ahead of what could have been record snow, seven states preemptively declared a state of emergency for what some dubbed Winter Storm Juno. Authorities shut down many major cities, canceling thousands of flights and closing major roads and mass transit systems. Though Boston was pummeled by about two feet of snow, New York City and most of the region emerged relatively unscathed.

“We think the economic impact of the storm is going to be relatively small,” said Evan Gold, senior vice president at weather advisory firm Planalytics. “We’re estimating at about $500 million, and that’s simply based on the duration of the storm, the timing of the storm and the population centers that are impacted.”

Others estimate the cost may be closer to $1 billion, considering the lost business, wages and taxes, and snow removal costs. According to a new report from City Comptroller Scott Stringer, in the past 12 years, every inch of snow cost New York City an average of $1.8 million to remove. From 2003 through 2014, the city spent $663.2 million just to clear the snow. Lighter snowfall actually takes a greater toll per-inch. “It’s a lot more expensive on a per-inch basis when we get a little snow because we have startup costs and we have fixed costs. We have to have plows and salt,” Stringer said. As a result, the city saw 55.5 inches of snow in 2003 and paid $740,000 per inch in cleanup costs, while the city had 6.8 inches of snow in 2012 and paid $4.4 million per inch.

In a press conference on Tuesday, New York Governor Andrew Cuomo shrugged off the financial implications of preparations for and recovery from Juno, calling it one of the “costs of doing business.” He explained, “We factor that in—things like snow removal, salt purchases, overtime for crew to handle storms, these are factored in the budget and this was not exceptional to that process.”

The cost of overpreparation is hefty, however, and it primarily falls upon the public. A one-day storm in Massachusetts costs the state economy about $265 million, while the total cost in New York is around $700 million, according to the Boston Globe. A significant portion of that is due to lost wages for hourly workers, who tend to be hit the worst by snow-related shutdowns.

Travel cancellations have a similar impact. According to research firm masFlight, it costs an airline about $6,000 to cancel a typical domestic flight on a full-size jet, but the total tab for all the passengers who were supposed to be on board is about $58,000, due to the additional costs of lodging and meals. More than 4,700 flights were cancelled Tuesday after about 2,800 on Monday ahead of the storm, CNN reported. Amtrak also suspended service between New York and Boston because of the weather.

Lessons Learned from Winter’s Wrath

What a winter. As the “polar vortex” pushed cold weather from the arctic all the way to the deep south in the United States, severe snow storms and frigid temperature cost the American economy billions. While there have been obvious physical losses, such as roof collapses and endless potholes to repair, three less evident balance sheet exposures have wreaked havoc across a broad swath of industries. People are paying attention to the economic impact of the weather (witness #frozenomics on Twitter, a term coined by CNBC).  Here are some of the weather-related exposures we are watching:

  1. Event cancellations. This season’s major snowstorms and unrelenting freeze forced the cancellation of countless events, from conferences, to sporting events. Event hosts have suffered not only lost revenue from attendees, they forfeited the merchandise sales and “sunken costs” – from signage to non-refundable food and beverage deposits -of their suddenly defunct events. Even those that staged events far from the possibility of snowflakes felt the fallout, as airlines cancelled flights in record numbers. (Some 13,500 flights were cancelled in one week in February alone. ) In many cases, attendees just could not make the trip, as winter weather halted transport to even sunny locales.
  2. Lost income. When customers cannot be out and about due to winter weather, sales suffer, business income drops. One restaurant in Atlanta lost $75,000 in revenue due to the snow on Valentine’s Day alone. This season not only gave us enormous amounts of snow, but prolonged frigid temperatures and precarious ice-filled sidewalks kept customers away from everything from outdoor skating rinks, retail shops, to car dealerships. Event planners and business owners saw income decline accordingly.
  3. Snow removal. Extraordinary snow removal demands tore through the budgets of municipalities and highly-trafficked properties such as hotels and airports. Roadways, parking lots and sidewalks must be safe and passable, so entities had to reallocate to find funds for labor, salt, de-icer and grit. In many cases, these costs were two or three times the amounts anticipated for the season. Last month, the state of Virginia was projecting its snow removal costs could reach $370 million, or twice the usual expenses.  Even places that normally expect minimal, if any, snow suffered costly storms. Property managers and association board members up and down the East Coast have been left scratching their heads over what to predict for next year’s snow removal budget.

The sunshine of spring will make it easy to forget this winter’s wrath, but for many, the hard financial lessons of this winter will leave lasting impressions. Looking ahead to next winter, risk managers can use hindsight to be sure their business is well protected on all (weather) fronts. Versatile insurance solutions can do everything from addressing the multiple facets of event cancellation losses, to bringing certainty to snow removal budgets and stabilizing business income through stormy times.

The following infographic from Beazley offers some interesting statistics on the winter that was:

Winter Weather Third-Largest Cause of Cat Losses

Winter Snow Storm

Weather damage never goes out of season. According to a new report from the Insurance Information Institute (I.I.I.), winter storms are historically the third-largest cause of catastrophe losses, behind only hurricanes and tornadoes.

“Winter storms accounted for 7.1 percent of all insured catastrophe losses between 1993 and 2012, placing it third behind hurricanes and tropical storms (40 percent) and tornadoes (36 percent) as the costliest natural disasters,” said I.I.I. President Robert Hartwig.

Insured Catastrophe Losses

Between 1993 and 2012, winter storms resulted in about $27.8 billion in insured losses—or $1.4 billion per year, on average, according to Property Claims Service for Verisk Insurance Solutions.

A December ice storm in North Texas left at least $30 million in residential insured losses in its wake, the Insurance Council of Texas reported. This figure does not include estimated damage to vehicles or government property, nor does it take into account the significant municipal expense of safety or cleanup measures. Dallas County alone spent $300,000 to $400,000 just to battle slick roads, according to conservative estimates from County Judge Clay Jenkins. He told Insurance Journal that, while sanding and salting roads constituted some of the county’s greatest efforts, the biggest cost came from closing offices, including the court system. Weather-related shutdown resulted in lost productivity of about $1.5 million, he said.

Nation-wide, December weather caused total economic and insured losses estimated in the hundreds of millions of dollars and claimed 29 lives, Aon Benfield reported.

But 2013 should have made some fair-weather friends in the insurance industry. Last year, according to Munich Re, direct overall losses caused by global disasters amounted to around $125 billion and insured losses of around $31 billion. While exceptionally costly, these were below the 10-year averages of $184 billion and $56 billion, respectively.