Here in Central Texas we are suffering through a blazing and historically hot summer, with a new record of 45 consecutive days of over 100-degrees. Our grass is all scorched, trees look stressed and the City of Austin recently went to Stage 2 Water Restrictions.
A Proactive Approach to Prevent Costly Winter Property Damage
As much as we’re dreaming of cooler days, we know that Texas weather loves to keep us on our toes, and the past few Texas winters have brought their own challenges via ice storms, very hard freezes and the Snowpoclypse of 2021.
Texas Winters: Battling Frosty Pipes
Each of these Texas winters were a little different, and brought their own unique challenges. One common issue though has been the frigid temperatures bursting water lines; when the lines freeze and water turns to ice, it expands and wrecks the pipe.
When it starts to warm up and the ice thaws, you get a river of water flowing from the pipe. This has been a consistent issue across the last few winters–we’ve dealt with flooded units and plumbing repairs across a good chunk of our portfolio. At our Class A assets, it tends to be sprinkler lines in the ceiling. At some of our older vintage assets the damage has mostly been isolated to a specific floor plan where plumbing sits on an outside wall. Those have been minor issues.
The one consistent problem we’ve faced, recurring at the same asset, is where we have laundry closets located on the outdoor back patio. Those frozen pipes get really hard, and send water into adjacent units and billowing down below them. Since our freezes have hit at the untimely period around the Holidays when more people are traveling, it can take even longer for the leak to be recognized and reported. Headed into this winter, we are determined to fix this issue and protect ourselves from having to deal with this again. Fool me once, shame on you. Fool me twice, shame on me.
Facing the Insurance Storm: Rising Costs
A big reason we need to get proactive about making sure these pipes get protected? The ever-changing insurance industry. These unusual weather events across the nation have left the insurance industry reeling. And let’s be honest, their response has not been in our favor. Insurance prices are skyrocketing across the country – in Texas markets, premiums are up 50-100% year over year.
The most significant impact is how carriers are treating freeze/winter storm claims. Two years ago, our insurance policy had a $100,000 deductible per policy–if we had damage at every single asset that deductible would split across multiple assets on that policy; our average expense per asset was ~$2,000.
Last year, the industry updated the Winter Storm coverage to be a $100,000 deductible per ownership group. So rather than spreading out the cost of a deductible across dozens (or even hundreds of assets) it was tied to only Wildhorn-owned assets. Among the assets that had damage, we averaged about $20,000 in deductible expense. Not ideal, but not fatal.
At our insurance renewal this year, the industry had shifted again. Winter Storm coverage now carries a 1% deductible per location per event. That means that a large freeze event at any single asset would have a deductible costing 1% of the TIV of that asset. Now the potential exposure is between $170,000 – $400,000, per asset. Given the dramatic rise in deductibles, and our huge increase in exposure, you can see why this has our attention and focus.
Strategies for Winter Protection in Austin, Texas
So, we got to work on finding a solution. Our construction management team collaborated with our General Contractor to assess all the options that would prevent pipe freezes and bursts, and alert us to damage. Several ideas were floated around, for example installing sensors in the outdoor water closets, small heaters, and even cameras.
We decided on a simple yet highly effective strategy– a combination of insulation and heat tape for the outdoor water closets. By enhancing the insulation around the vulnerable areas, we’re creating a barrier against the freezing temperatures. And the addition of heat tape (hopefully) ensures that even in the harshest conditions, the water remains in motion, preventing any chance of freezing. It’s a strategic investment that not only safeguards us from potential damage but also adds value to our property.
Teamwork and Readiness for Winter
Timing is everything, and we’re not wasting any. We’re taking immediate action to get the repairs done before winter comes knocking. We expect to have everything finished by November, giving us plenty of time before the risk of truly harsh freezes start. That should be mid-December at the earliest. .
The challenges posed by freezing winters were not to be taken lightly. Yet, we didn’t simply stand by, hoping for the best next year. I am immensely happy to see how our team rallied together, brainstormed, and charted a course that puts us in a much better position.
Now we can get back to worrying about how to stay cool against this heat.