The Connection Between Building Maintenance and Insurance Claims

Regular building maintenance plays a major role in protecting property value. Maintenance can impact student safety in college dorms or lead to room downtime in hotels.

Skipping necessary maintenance could lead to leaks, premature equipment failure, and costly insurance claims. In fact, deferring maintenance may lead to an insurance provider denying a claim or raising premiums. Smart building sensors offer insight into potential problems, so they can be addressed before getting out of hand.

How Poor Building Maintenance Increases Insurance Claims

Failure to maintain a building properly could lead to a range of issues, particularly water leaks, structural damage, and fire hazards. These problems often result in insurance claims that drive up policy costs and, in some cases, cause insurers to limit or deny coverage altogether.

The most common consequences of ignoring needed maintenance/water leaks

Neglecting essential building maintenance, especially when it comes to water leaks, can lead to extensive damages and increased insurance claims. Water from undetected leaks may lead to mold growth, structural deterioration, HVAC systems failure, or even electrical failures. Over time, these issues could result in hazardous conditions, compromise safety, and drive up repair costs.

Building maintenance, such as regular inspections, timely repairs, and leak detection systems, reduces risks and may even qualify property owners for lower insurance costs and fewer claim denials, making it a smart financial decision.

Impact on insurance claims/prices/coverage

Neglecting routine building maintenance could impact insurance claims, premiums, and coverage. A large number of insurance claims result from minor issues that are easily preventable through regular upkeep. Water damage accounts for roughly 24% of all insurance claims. More importantly, experts agree that the vast majority of claims were preventable.

When these minor maintenance issues are ignored, they can easily compound into larger problems which can be a really bad look for insurers. This trend not only affects individual policyholders but also poses challenges for insurers, as the accumulation of preventable claims can strain resources and impact profitability.

To combat this, insurance companies may respond by increasing premiums for properties with an extensive claims history. Additionally, insurers might adjust coverage terms, imposing stricter conditions or exclusions related to maintenance-related damages.

By implementing regular maintenance practices, property owners can significantly reduce the frequency and severity of claims by 12-18%, thereby maintaining more favorable insurance premiums and coverage terms.

The Financial Benefits of Regular Maintenance on Insurance Costs

Reducing your insurance premiums

You have probably heard that insurance companies love risk mitigation technology,” and it is true; insurers reward policyholders who take proactive steps to reduce potential damage.

For instance, by implementing preventive maintenance solutions, such as smart IoT sensors by Perceptive Things®, you may qualify for discounts on premiums or even lower deductibles.

Being able to avoid large-scale repairs/problems

When it comes to property maintenance, a proactive approach is far more cost-effective than a reactive one. Waiting until something breaks or malfunctions can lead to expensive, large-scale repairs; many of which could have been prevented with routine maintenance.

Take, for example, a small roof leak. If caught early through regular inspections, it might only require a minor patch or sealing. But if left unnoticed, that same minor leak could eventually lead to bigger problems, such as extensive water damage, mold growth, etc.

This highlights why regular maintenance not only protects your property but can also lower your insurance costs as it demonstrates reduced risk to your provider.

Increased property value

Regular maintenance does more than just prevent costly repairs; it also helps retain and even increase the value of your property over time. According to HAR, well-maintained properties can appreciate by about 1% per year, while neglected properties may see a decrease in value of up to 10%.

For rental properties, maintenance can be a game-changer. A well-kept building retains its structural integrity, aesthetic appeal, and overall functionality, attracting reliable tenants and buyers. This increases rental income, reduces repair costs, and lowers insurance premiums. Additionally, well-maintained homes tend to sell faster and for 10%–15% more than properties with deferred maintenance.

Scheduling inspections

Scheduled inspections are an important part of preventive maintenance, as it helps property owners to catch small issues before they escalate into costly problems. Critical systems like plumbing, electrical, and HVAC should be routinely checked to ensure they’re functioning properly and efficiently. Neglecting these inspections can lead to major failures or large-scale damage that results in expensive repairs and higher insurance claims.

Smart technology, such as IoT sensors, makes it much easier to stay on top of inspections/ maintenance services that have to be done. These devices can detect potential issues, such as water leaks before in between regular property inspections.

Staff training and accessibility

Having the right technology in place is only one part of an effective maintenance strategy, ensuring your team is trained to use it is equally as important. Insurers value proactive risk management, and a well-trained team using smart maintenance technology can contribute to reduced premiums and long-term savings.

Besides, an easy-to-use platform for tracking potential issues, such as leaks or system malfunctions, allows property managers, maintenance staff, or hotel employees to quickly identify and address problems before they escalate.

For example, in a scalable hotel setting, a property manager who receives an automated alert about a small water leak can take immediate action. This prevents the problem from turning into a costly flood that could damage guest rooms and impact business operations.

Documenting maintenance

Keeping detailed records of all maintenance and repairs is a crucial aspect of property management that can save both time and money. A well-documented maintenance history provides a clear record of preventative measures taken, making it easier to track recurring issues and ensure problems are properly addressed.

This documentation can be especially valuable in the event of an insurance claim. If damage occurs despite regular maintenance, having records of past inspections and repairs can serve as proof that maintenance/preventative measures were taken. This not only strengthens your case with the insurer but may also help in securing a faster claims process or even reducing liability in some situations.

Taking note of others in the industry

Keeping up with the latest industry codes, regulations, and best practices is essential for maintaining a safe and compliant property. Regulatory standards evolve over time, and failing to adhere to updated requirements can lead to costly fines, increased liability, or even higher insurance premiums.

Looking at what others in the industry are doing can provide valuable insights. If competitors or similar properties are implementing new maintenance technologies or risk mitigation strategies, following suit can help you stay ahead and maintain a competitive edge. This not only protects your property but also strengthens your financial position through reduced insurance costs and enhanced property value.

Using IoT Technology in Building Maintenance to Minimize Insurance Claims

The Internet of Things (IoT) is revolutionizing building maintenance, offering real-time monitoring and automated alerts that help prevent costly damage before it happens. By deploying IoT devices across multiple buildings, property owners and managers can track critical systems—such as plumbing, HVAC, and electrical networks—24/7, ensuring potential issues are detected early.

One of the biggest advantages of IoT technology is its ability to send immediate alerts when a sensor detects a problem. For example, if a water leak is detected, an automated email can notify the building manager, while a text message can be sent directly to an on-call plumber, ensuring a swift response.

This targeted communication protocol reduces downtime, minimizes damage, and prevents small issues from escalating into expensive insurance claims.

IoT solutions that mitigate and reduce risk

By integrating smart devices into building maintenance strategies, property owners can proactively address risks, maintain safer buildings, and minimize costly insurance claims.  Here are some key IoT solutions that help mitigate and reduce risks:

Water Leak Detection Devices: Perceptive Things® Droplet Solo®

Water leaks are one of the most common and expensive sources of property damage. The Droplet Solo® detects leaks instantly and sends alerts in real-time, allowing for quick intervention before significant damage occurs. By preventing leaks from spreading, this technology helps avoid costly repairs and insurance claims related to water damage.

Temperature & Humidity Monitoring: Mercury Ambient Sensors

Excess humidity and fluctuating temperatures can create conditions for mold growth, HVAC inefficiencies, and other structural deterioration. Mercury® ambient sensors continuously track temperature and humidity levels, allowing for early detection of environmental risks. It helps identify potential issues that could lead to health hazards or system failures.

Asset Security and Equipment Monitoring: Motiv Sensors

Keeping track of valuable assets is crucial in large buildings. The Motiv® sensor monitors movement and vibrations, detecting any unauthorized activity. This ensures that critical machinery remains secure and operational, reducing the likelihood of theft or damage-related claims.

Benefits of integrating IoT

Data-Driven Maintenance Strategy

IoT sensors continuously collect and analyze real-time data, providing deep insights and information into a building’s critical systems. With this information, property managers can anticipate potential failures, schedule a better proactive maintenance approach, and optimize system performance. All of these help to reduce unexpected breakdowns and costly insurance claims.

Improved Documentation for Insurance & Risk Management

Having a detailed history of maintenance activities, sensor alerts, and preventive actions creates a clear record of responsible risk management. This documentation can be valuable when working with insurers, as it demonstrates proactive property care and strengthens claims or policy negotiations.

Potential for Insurance Discounts

Many insurance companies recognize the value of IoT technology in reducing risk and may offer discounts on premiums for properties that use smart maintenance solutions. By providing a lower likelihood of claims through IoT-enabled prevention, property owners can negotiate better rates and reduce overall insurance costs.

Final Thoughts on The Connection Between Building Maintenance and Insurance Claims

Poor maintenance not only increases the likelihood of costly insurance claims but can also drive up insurance premiums over time. On the other hand, a proactive maintenance instead of a reactive approach offers many different types of financial benefits, including less downtime, cheaper insurance, lower repair costs

Integrating IoT technology makes preventive maintenance easier and keeping track of it more convenient. For instance, with real-time monitoring, instant alerts, and automated documentation, property owners can stay ahead of potential issues while providing insurers with a clear risk management history; potentially leading to discounts and better coverage terms.

What does your current maintenance strategy look like? Could it benefit from Perceptive Things®’ smart IoT solutions? Have you experienced insurance issues due to a lack of regular maintenance? Share your insights on how proactive technology has helped you protect your property and lower insurance costs.