Tuesday October 06, 2026
The most expensive water damage claims often start with the smallest leaks. For board members, water damage presents a difficult reality: by the time a leak is discovered, the damage is already done. The conversation has shifted from how to respond to a water loss to how to prevent one in the first place. Today, that means understanding not only the insurance ramifications of a water damage claim, but also the technologies designed to detect leaks early and help avoid costly repairs.Does homeowners’ insurance cover water damage?
When a water leak occurs, one of the first questions boards ask is, "Who is responsible?" The answer depends on how the damage happened and where it originated.Most homeowners’ insurance policies cover sudden and accidental water damage, such as a burst pipe, failed appliance hose, or overflowing water heater. However, water damage resulting from long-term neglect is often excluded from coverage.
The association's master policy generally covers shared building components and common areas, while unit owners are responsible for their unit's interior, personal belongings, any upgrades or improvements, and additional living expenses if the unit becomes uninhabitable following a covered loss. When water travels beyond its point of origin, multiple policies may come into play, making it important for boards to understand where the association’s responsibilities begin and end.
Water-related incidents make up more than half of all property claims in many communities and high-rises, and industry data suggests up to 53% of those losses could have been prevented with earlier detection.
Why water damage repair costs escalate so quickly
The financial impact of a water loss extends far beyond fixing the leak itself. Even a relatively minor plumbing failure can trigger a cascade of costs, from emergency mitigation and restoration to insurance deductibles and mold remediation. Repeated or significant water losses also affects an association’s claims history, contributing to higher insurance premiums, increased deductibles, and less favorable terms at renewal.In condominiums and high-rises, water damage often creates challenges that extend well beyond the initial incident. A leak in one unit can quickly spread to the units below, affecting multiple residents and creating overlapping repair and insurance responsibilities. As a result, what begins as a single maintenance issue can quickly evolve into a multi-party event that requires careful coordination to resolve.
Industry data consistently identifies water damage as one of the most frequent sources of insurance claims in communities and high-rises, with many of those losses stemming from leaks that went undetected until substantial damage had already occurred. Overnight failures can also be especially costly, allowing water to spread unchecked for hours before residents or maintenance teams become aware of the problem.
As a result, associations are increasingly focused on preventing water-related incidents where possible and reducing the severity when they do occur, rather than simply responding after the fact. The goal is not only to avoid repairs, but to limit the financial and operational disruption that follows a major loss.
Smart water detection: the proactive alternative
Smart water detection systems use sensors to monitor high-risk areas and send real-time alerts when moisture is detected. Some solutions also include automatic shutoff capabilities that can stop water flow and reduce the extent of damage.The value proposition extends beyond leak detection. Early intervention can help limit property damage, reduce repair costs, minimize operational disruptions, and support broader risk management objectives.
For associations looking to strengthen their approach to water risk, smart detection provides another layer of protection alongside regular maintenance, inspections, and resident education. By identifying problems earlier and enabling a faster response, these systems can help associations better protect their properties and financial resources.
"Water-related losses remain one of the most significant and preventable risks facing residential communities. Water detection solutions provide a proactive way to identify issues early, reduce disruption for residents, and help protect long-term property value. This offering reflects our commitment to smarter risk management and stronger outcomes for the communities we serve."
Andrew Lester, president, FirstService Financial
What boards should compare when evaluating detection systems
Smart water detection systems can vary significantly in coverage, capabilities, and cost. For boards, the goal is not simply to compare technology, but to determine which solution aligns best with the building's risk profile and operational needs. When evaluating providers, consider:- Coverage: How extensively will the building be monitored? A system that protects every unit offers a different level of risk reduction than one focused just on common areas.
- Total cost of ownership: Look beyond upfront pricing and compare equipment, installation, monitoring fees, maintenance, and projected costs over several years.
- Contract structure: Review the length and terms of the agreement, ongoing service requirements, and the flexibility to expand or adapt the system as the association’s needs or technology change.
- Response capabilities: What happens when a leak is detected? Determine who receives the alert, such as the resident, front desk, maintenance team, or property manager, and how they are notified, whether by text, phone call, email, app notification, or a combination of methods. Boards should also consider whether alerts can be escalated when the initial contact does not respond, whether monitoring is available 24/7, and whether the system can automatically shut off the water to help limit damage.
- Building requirements: Identify any additional plumbing, electrical, internet, cellular, or other infrastructure upgrades that may be required as part of implementation.
The alert that prompted immediate action
At a high-rise in Chicago, Illinois, an automated water leak alert provided the onsite team with something critical during an emergency. Instead of searching for the source, staff knew exactly where to respond, allowing them to act immediately."As soon as the alert came through, the Chief Building Engineer went directly to the unit. The source was identified as a slow leak, which was quickly addressed and resolved before it could cause significant damage."
Jamie J., Community Association Manager
Building a stronger water damage strategy
Water damage is one of the most common risks facing communities and high-rises, but with the right technology in place, it is also one of the most manageable.By combining thoughtful insurance planning, resident education, preventative maintenance, and proactive technologies such as smart water detection, boards can strengthen their approach to risk management while helping protect property values and association resources.
FS Insurance Brokers, a subsidiary of FirstService Financial, works with boards to better understand their water damage exposures and the role insurance and risk management strategies can play in reducing their impact. Our team provides guidance to help communities make informed decisions based on their unique needs and risk profile.
To learn more about how our solutions can support your property, fill out the form on the right side of the page or visit www.waterdetectionsolutions.com
DISCLOSURE: FS Insurance Brokers, an affiliate of FirstService Residential, has partnered with select companies to develop and administer water detection solutions for communities managed by FirstService Residential. To review additional information about our services and disclosures, you may access our Transparency Brochure.
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