If your family is like most high net worth families, many of whom own multiple residences, your exposure to risk and any damage incurred as a result of poor risk management is proportionally higher than average. Also, like many people, you may think of risk management as analogous to “insurance.”

To be sure, insurance is one of the fundamental building blocks of any risk management program, but in its most basic form, insurance simply safeguards against financial damages resulting from an adverse event. While it is essential to understand the specific events your policy covers, even more important is mitigating your exposure by preventing those avoidable events in the first place.

In short, when it comes to minimizing risk, the age-old maxim, “An ounce of prevention is worth a pound of cure,” still applies and is illustrative of G2’s approach to risk management.

We will demonstrate this point by focusing on a major risk that is easy to safeguard against but generates more than its fair share of insurance claims: water damage, which accounts for nearly one quarter (23 percent) of all homeowner insurance property loss.1

Even to those of us well versed on the subject, the proliferation of damage caused by water is still cause for surprise. Consider these statistics:

  • Every day, 14,000 people in the United States experience a water damage emergency.2
  • Water leaks in homes result in property loss amounting to over $10 billion annually.3
  • Based on policyholder data from the AIG Private Client Group, the average cost of a water damage claim in luxury homes is $50,000.4

This means that a home like yours—fashioned from the best materials with the finest interior furnishings, art and collectibles—is especially at risk. Should a water damage event occur, you simply have more to lose. The same applies to everything from wildfires and seismic event-related risks to flood risk (another type of water damage with its own preventative measures and insurance coverage).

Consider further that, illustratively, a 1/8 inch crack in a pipe would result in the release of 250 gallons of water per day.5 A seemingly innocuous risk such as this is easy to overlook until the damage is already done, but it is important to remember that such a risk is easily preventable. The regular inspection of all plumbing and any appliances engaged in water use, plus the installation of water-leak alarms and automatic water shut-off systems, provides an inexpensive risk management solution to minimize water damage.

In our view, implementing loss mitigation, even if it’s this simple, should not be your job. Someone who knows you and your home(s) should help you understand these issues. Specifically, your insurance broker should be thinking this through, appraising and taking steps to mitigate risks like water damage.

It may seem counterintuitive for an insurance brokerage firm to take measures that avoid insurance claims and to argue against adding additional policies.

However, we believe it is your insurance advisor’s obligation not just to insure you against risk, but also to minimize it. And that requires an approach that focuses as much on preventative measures as it does on putting the right insurance products in place. It is what you might call a “retro-radical” approach.

At G2, we are strong believers in this approach: Combining personal service from a bygone era with today’s best talent and technology. By doing so, we can help ensure that our clients are not only properly protected in the event of an emergency such as water damage, but that the likelihood of such events is minimized at the outset.

1http://www.platinumadjusters.com/water-damage-claims
2http://www.waterdamagedefense.com/pages/water-damage-by-the-numbers
3http://leakpreventionpros.com/insurance-discounts.php
4Figure based on U.S./Canada policyholder data from AIG Private Client Group, a division of the member companies of American International Group, Inc. (AIG). Information is current as of 10/1/14.
5http://www.simplyjustice.com/water-damage-statistics

This article was originally published in the December/January 2016 issue of Worth.