Date: Jul 25 2019
Recently we sat down with FOX member, Steve DelGiudice, a technical specialist with AIG Private Client Group, to get an understanding of what ultra-high net worth families should keep in mind when constructing a new home and efforts they can take to protect their loved ones and most valuable possessions.
FOX: What is a resilient custom home?
Steve DelGiudice: We use this term for homes with state-of-the-art techniques to keep them standing when floods, winds, or fires strike. Resiliency generally refers to a building’s ability to withstand natural disasters such as hurricanes, earthquakes, tornadoes, wildfires, flooding and other severe weather events. We also consider water damage and fire prevention, security and safety, flood prevention, energy and environmental design, wind mitigation, lightning protection, earthquake mitigation, wildfire mitigation, art collection management, and life safety concerns key to a resilient custom home.
FOX: What are considered protective devices or materials and why are they critical for homes of ultra-high net worth families?
Steve: It seems like new construction materials and protective devices are hitting the market at a much higher rate now than years past. A protective device or material is just that, something that acts as a barrier for your family, home, and valued possessions.
Some examples of protective devices/materials currently on the market are automatic whole house water shutoff valves, backup generators, fire sprinkler systems, fire/burglar alarms, aspirating smoke detection systems, safes/safe rooms, smart vents (certified engineered openings in foundation), impact rated windows/doors, lightning/surge protection systems, gas shutoff valves, specialty ember-resistant venting, premium water resistant & air barrier sheathing systems, liquid applied commercial roof membranes, spray foam insulation, etc.
Understand that the above list is just a high-level overview of some of the items that can be installed in a newly constructed or renovated home today. As far as why these devices/materials are critical for homes of ultra-high net worth families the answer is simple: there is a lot on the line.
Ultra-high net worth families typically build complex and technologically advanced homes. Most of the materials used (interior/exterior) are imported and/or custom, and they need to be properly protected if an event was to occur. Sometimes these homes take 2-3 years to fully complete. Not only are they extremely expensive to build, but a lot of time and decisions are made to bring a concept to reality. Also, most of the finishes are custom and would be nearly impossible to fully replicate if they were destroyed.
Outside of the finishes, the electronics that manage these homes are highly sophisticated. Typically an ultra-custom home can be operated from a keypad. The heating/air-conditioning, lighting, music, and shades can all be accessed from one location. Although these systems are highly efficient and convenient, they are costly to replace and/or repair.
FOX: When is the ideal time to install protective devices/materials? Can this lighten a homeowner’s insurance premium?
Steve: Many times, we gain involvement in a new construction or a renovation project when the foundation has already been installed, or the framing has already started. Obviously, we would prefer to give our input earlier rather than later, but as long as the home is not closed up we can still have an impact on the project.
A good example would be installing a floor drain in the second-floor laundry room. Even if the home was fully framed but not yet closed up, installing a floor drain would be relatively easy. If the walls were already sheet rocked, the flooring was installed, and the plumbing was completed, this would be much more challenging.
I recently conducted an initial assessment with a contractor I had never met before. We were discussing the recommendations list and looking at the floor plans. Once I discovered that a laundry room was expected to be installed on the second floor, I asked the GC if a floor drain was a part of the scope of work. He looked at me and said “No, but that is a great idea.” He wrote this down on his list of things to discuss with his boss, and it looks like a floor drain will now be installed at this location. Sometimes it is just the little things that can make a huge impact.
FOX: Do you have any success stories where being proactive fended off calamity or will more likely fend off calamity in the future?
Steve: There are many success stories, but here are a few that come to mind:
- One of our risk managers was visiting a home under construction in the Rocky Mountain region of the country. While assessing the home’s exterior, he stopped to observe an area of the home that cantilevered outside of the building envelope. While conversing with the contractor, the risk manager addressed his concern for freezing in this area of the home.
The contractor explained to the risk manager that all of the water lines had been installed within the radiant floor area, but that drains could not be included since they hung down lower than the floor area. In return, our risk manager recounted an insurance claim where the plumbing trap had frozen, cracked the drain pipe, and then caused a serious leak when the drain was used. Armed with this knowledge, he suggested installing additional radiant floor loop to wrap around the traps to prevent freezing in the future.
The contractor loved this idea and thought it was a great solution to protect this vulnerable area of the home. The additional radiant loop was added, and hopefully this small step will pay big dividends down the road.
- Another story pertains to a home that was built with 100% concrete construction. Retrofitting a home built in this manner would be next to impossible, so being proactive with everything related to construction was the smart play here. We conducted a site visit at the beginning of construction with the broker, site supervisor, architect, project manager, and an AIG art collection manager.
Many of our recommendations were expected to be implemented, but the suggestion to install a misting sprinkler system in the art storage facility of the home—as well as special alarms to protect the artwork—was the big ticket item. Upon completion of the home, over $100m of artwork was expected to be installed in this art storage area connected to the main home. Getting in front of the project team early was the key factor in this case.
FOX: What are some surprising examples when folks didn’t have the devices/ materials in place and things went wrong?
Steve: Here are examples of some recent claims that likely could have been avoided if proper loss prevention was considered.
- The first example was a large water loss that took place on Long Island, New York. This was a 5-year-old custom waterfront home that was well insulated and featured a backup generator, low temperature sensors, and other bells and whistles. The home sustained high freezing wind from a particular direction, which found a minor opening in the exterior siding and drove freezing cold air directly into the wall cavity. As a result, an inner wall pipe froze on the third floor. The pipe burst and poured out water for at least one whole day, ruining three levels of the home.
Based on the engineer’s report, the home had been adequately heated throughout the winter months, but this pipe was still vulnerable. The home consisted of museum-quality finishes, was filled with exotic flooring, custom handcrafted woodwork, and all finishing elements were either handpicked or hand constructed from materials which were brought over from Europe. The total loss amount was approximately $8m, which included the property damage, mold remediation, and loss of use.
All of this destruction and disruption could have been avoided if an automatic whole house water shutoff valve had been installed in the home. These valves are typically installed to detect water flow, so rather than clean up a small puddle of water and deal with a minor issue, the family was displaced for over a year dealing with the repairs. The valve would have detected the burst pipe and automatically shut off the water main, avoiding this loss.
- Another example I want to share is also related to water damage, because ultra-custom homes often have a multitude of water points installed throughout the home. From numerous bathrooms on all levels of the house, oftentimes two kitchens, wet bars, and mechanical equipment scattered throughout the space, water is by far the biggest disrupter.
This loss involved a recirculating pump located on the third floor of the home where one of the pipes detached from the unit and started leaking. The water flooded two bedrooms, the hallway, staircase, study, kitchen, library, and elevator. Many personal items were either damaged or destroyed.
The loss took place at a home in Connecticut, and the culprit in this case was a cheap pipe fitting that failed and led to all of the damage.
The takeaway here is that appliances and mechanicals are now being fitted with less expensive components, and we never know when and which ones are going to fail. Once again, if an automatic water shutoff valve was installed in this home, this loss would have been considered a minor loss.
FOX: What has surprised you most regarding custom home building resilience planning?
Steve: I think the concept that has surprised me most is that high-end builders who construct ultra-custom homes are often very knowledgeable about loss prevention and how to best protect the homes they build. This is a good thing.
We try to update our suggestions regularly because we’re always looking for the latest and the greatest protective devices/materials on the market. That diligence can enable us to educate the builders on some level, but they are also doing their homework.
Bidding on these ultra-custom homes is very competitive and time consuming; builders want to make sure that first of all they are hired, and secondly, they can provide their clients with the most information possible. We help them by giving them another feather in their cap. If they are familiar with a suggestion we provide that they want to sell to the client, they can stress it even further by stating that their insurance company also feels this is a good idea.