Managing risk is a year-round priority for financial institutions. However, certain seasons and types of weather can bring greater risk opportunities for collateral and properties.
Over half of American states are susceptible to cold weather and subsequent damage to property. Plus, the average credit union member age is 48, and these older members are more likely to winter in warmer climates, leaving their properties vulnerable to potential damage.1 Abandoned and/or foreclosure properties must also be given care to avoid preventable damage.
Some situations, such as frozen or burst pipes leading to water and mold damage, may not be covered under P&C or lender placed hazard policies if “reasonable measures” were not taken to prevent losses. That’s why proactive measures should be taken to protect vacant properties against winter-related damage.
ICYMI
Check out this episode of the Allied Angle
3 tips to protect your portfolio of properties during cold weather months
1. Remind homeowners to maintain heat control
Vacant properties remain cooler than a typical, livable temperature and will need extra measures for controlling heat.
Some tips to share with homeowners include:
- Locate and seal cracks and openings in walls, attic, basement, and crawlspace.
- Weatherstrip and caulk around crawlspace doors and basement windows.
- If needed, contact your energy companies to ensure the gas and electric bills have been switched to your financial institution and that services will be maintained.
- Maintain a temperature of at least 55 degrees on the property.
- Keep doors open to rooms with plumbing, to allow heat to flow throughout the property.
- Shut off water supply and heat sources to the hot water heater.
- Perform regular maintenance checks to ensure heat is continuing to be supplied and to quickly identify any potential damage.
Check your policy to see what minimum temperature is required for claims to be paid. Be sure to file all claims through your property insurance carrier, as some or all of these damages may be covered under the policy.
2. Encourage homeowners to manage water supply
If a property is going to be vacant for an extended period of time, managing the water supply is ideal. This method is less costly than maintaining controlled heat, while also offering a better method for reducing losses.
Tips to share with homeowners include:
- Properly insulate the property, paying particular attention to areas where pipes are located.
- Locate and seal cracks and openings in walls, attic, basement, and crawlspace.
- Insulate unprotected pipes and do not leave any gaps.
- Turn off the main water supply to the property to prevent frozen-pipes.
- Open all accessible faucets starting on the top floor.
- Use an air compressor at mild pressure to blow out the lines through the faucets.
- Plunge remaining water from toilets and add antifreeze.
- Open the faucet to drain the hot-water heater, and shut-off the gas and electric supply if heat isn't going to be maintained.
- Disconnect and drain garden hoses.
File all claims through your property insurance carrier, as some or all of these damages may be covered under the policy.
3. Develop a whole-portfolio protection plan
Do you have an insurance tracking program in place that looks at specific insurance requirements for properties in higher risk areas? Does your bond coverage include physical and cyber events?
Outside risk experts can provide additional insights into these questions and make sure that you have the right solutions to protect your institution - no matter the event. Allied Solutions’ team of risk management experts is ready and prepared to help financial institutions with tactical portfolio protection.
1 https://www.alliedsolutions.net/resources/news/pete-hilger-talks-genz-and-innovation-at-engage-2023/