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Pono Paahao was paging through this very magazine when he noticed an ad for a product that would prove to be a problem-solver for Heide & Cook, a full-service mechanical contractor with five locations across the islands of Hawaii, which has offered integrated services from new construction through preventive maintenance for the past 70 years.
“I liked that it was mechanical,” explains Paahao, vice president of services for Heide & Cook. “It’s the only 100% mechanical, automatic shutoff valve on the market. There are other products that are designed to shut off water in emergency situations, but those require regular maintenance that a homeowner may not do, plus an electrical connection – and the power can go out at the worst possible time.”
Heide & Cook’s service division is comprised of separate HVAC, Plumbing and Refrigeration Services, as well as Air Reps Hawaii, the retail arm of the contractor.
The product Paahao saw advertised was from AquaGuard, a company based in Cranston, R.I, which manufactures the original automatic tank water heater shutoff safety valve, known as the WAGS (“Water And Gas Safety”) valve. The WAGS valve is a single-use, one-time activation water flow shut-off device designed to cut off the water supply to a faulty water heater in the event of a leak, minimizing expensive property damage.
The WAGS valve sits in a drip pan under the water heater and is activated when leaking water accumulates to a predetermined level in the pan. Once activated, the industrial-duty, patented one-shot safety valve shuts off the water as well as the gas supply on gas-fired units.
Water damage
Since Paahao noticed the ad a couple of years ago, the company has been working to promote the product, filming an informative video that’s posted on its YouTube platform (tinyurl.com/yffwf7p3) and more recently inked a deal with AquaGuard to be the exclusive dealer of the product in Hawaii.
“Right now in Hawaii, condo insurance is a really hot item,” Paahao explains. “Premiums have skyrocketed. And if that wasn’t difficult enough, insurance companies are becoming very risk adverse and dropping coverage altogether. It used to be that after a homeowner made a few claims on a policy, the insurance company would consider that a non-renewal event. But now people are losing their coverage after making just one claim. That’s a huge challenge for our real estate market.”
After talking with him, Paahao emailed us a copy of a recent article from Hawaii Business Magazine, headlined, “Insurance Crisis Worsen in Hawaii’s ‘Condoland’” that reported some master insurance policies in a few condo buildings increasing an extraordinary 1,300%.
“It’s unlikely to get better any time soon,” says the article. “And a growing number of condos are now carrying master insurance policies that provide less than 100% replacement coverage, which means if there’s a hurricane or other disaster, there may not be enough funds to rebuild. It’s driving some buildings to seek coverage on the pricey secondary market.”
Rates for hurricane insurance and regular homeowner policies in Hawaii were already being driven up by disasters around the U.S. and the world when the devasting Maui wildfires happened last summer, putting Hawaii on the insurers’ radar as a wildfire state, according to the article.
What’s more, over the past year, Hawaii condo associations have seen one-year premium increases of 300% to 600%, which is four to seven times the previous cost, says Elaine Panlilio, AOAO Group Unit manager at Atlas Insurance Agency. A few buildings are looking at increases of 10 to 14 times the amount of the previous year’s bill.
Heide & Cook’s big selling point for the WAGS valve is to alleviate at least one common disaster, in this case, water damage from a leaking water heater and stave off a potential non-renewal.
“You’re showing your insurance agent that you’re doing what you can to mitigate risk,” Paahao adds. “The WAGS valve is a cost-effective option that can help with that because it’s fairly inexpensive to procure the valve itself, and it’s fairly inexpensive to install.”
Also, insurance companies may also offer a discount to home and property owners for installing the device.
Not just Hawaii
High insurance rates and dropped insurance policies are certainly not a huge issue reserved for only Hawaii.
Seven of California’s largest property insurers, State Farm, Allstate, Farmers, USAA, Travelers, Nationwide and Chubb recently limited new homeowners policies in the Golden State, raising questions about the stability of the California home insurance market.
In California, for example, Travelers recently said it would raise rates an average of 15.3% for more than 300,000 homeowners while dropping coverage for others deemed wildfire risks. State Farm had already announced it wouldn’t renew 30,000 policyholders in California this summer.
Meanwhile, Tokio Marine America Insurance Co. and Trans Pacific Insurance Co. submitted filings to the California Department of Insurance stating they will not renew 12,556 homeowners policies with a premium value of $11.3 million starting July 1, 2024. Also not being renewed are 1,624 dwelling fire and liability policies with a premium value of $1.7 million typically sold to owners of rental properties, as well as personal umbrella coverage.
Outside California, at least five large U.S. property insurers — including Allstate, American Family, Nationwide, Erie Insurance Group and Berkshire Hathaway — have told regulators that extreme weather patterns caused by climate change have led them to stop writing coverages in some regions, exclude protections from various weather events and raise monthly premiums and deductibles.
Major insurers say they will cut out damage caused by hurricanes, wind and hail from policies underwriting property along coastlines and in wildfire country, according to a voluntary survey conducted by the National Association of Insurance Commissioners, a group of state officials who regulate rates and policy forms.
“The same risks that are making insurance more important are making it harder to get,” Carolyn Kousky, associate vice president at the Environmental Defense Fund and nonresident scholar at the Insurance Information Institute, told The Washington Post.
The WAGS story
“It’s the property owner that is AquaGuard’s prime focus,” says Steven Fielding, president of AquaGuard. “They’re the ones that have to pay the insurance bills. They’re the ones that have all the stress.”
He added that a homeowners association in multilevel condo development would be an ideal candidate for his product. Fielding also markets his product to the Community Associations Institute, an organization that represents homeowners, condominiums, and other community associations.
“There are probably 50 million homes in the U.S. covered as part of an HOA,” Fielding notes. “In a high-rise, if you have a failed water heater, it could affect two or three floors. We get a lot of testimonials from happy customers that have avoided those disasters.”
Fielding, a mechanical engineer, originally partnered with the inventors of the idea and helped develop the first prototype valve in the 1997. The WAGS valve was manufactured for many years by a major plumbing and heating company through a licensing agreement. Eventually, Fielding bought out his partners and terminated the licensing agreement to make and market the valve on his own in 2017.
If there’s a can’t-miss in the plumbing world, Fielding says, a safety device that instantly shuts off the water when a water heater fails certainly qualifies.
“A relatively small amount of water can do a lot of damage, and a lot of water can leak quickly from a damaged tank,” Fielding adds. “Remediation experts say it can cost several thousand dollars to remove only one inch of water from a single floor of a small home.”
Nonweather-related water damage ranks among the top categories of residential insurance claims, according to the Insurance Information Institute; the average claim is about $11,000.
For the professional installer, a plumber needs only to connect the cold water line in and out of the WAGS valve. The company says installing the valve normally adds 15-20 minutes to a new tank installation. l