The $47B Question: Why Does Preventable Loss Exist in Residential P&C?

July 21, 2025

The Cost We Keep Paying


Each year, the U.S. property and casualty (P&C) insurance industry pays out over $100 billion in residential claims. Fires, water damage, windstorms, and theft represent not only financial losses but deeply disruptive experiences for homeowners.


What’s striking isn’t just the scale of the problem, it’s how much of it could be avoided.


Industry data suggests that nearly $47 billion of these losses are preventable. That’s almost half of total residential P&C payouts, year after year. These aren’t theoretical losses, and they’re not driven by rare events. They stem from risks hiding in plain sight, known issues, solvable problems, and missed opportunities for prevention.


So why do they keep happening?


Preventable Risk Isn’t Rare. It’s Routine.


When people think of insurance claims, they often imagine catastrophes—freak accidents, major weather events, sudden disasters. But the reality is often far more mundane. And more manageable.


Take some of the most common and costly categories of residential loss:


Water Damage


Much of this stems from things like:

  • Rubber hoses behind washers that degrade over time


  • Small, persistent leaks under sinks or water heaters


  • Sump pumps that fail quietly and unnoticed


Each of these can be addressed through low-cost interventions. Replacing old hoses. Placing inexpensive leak detectors. Installing a shutoff valve or maintaining a pump. These are the kinds of changes that prevent $10,000 losses with a $100 fix, but only if someone knows to act before the damage begins.


Fire & Lightning


Many residential fires could be avoided by ensuring:

  • Smoke and carbon monoxide detectors are installed and functional


  • Dryer vents are cleaned regularly


  • Fire extinguishers are accessible and up to date


These are tasks most homeowners support in principle but often overlook in practice, especially without reminders, guidance, or support.


Freeze, Intrusion, Liability, and More


Beyond water and fire, other loss categories reveal similar trends:

  • Frozen pipes in the winter


  • Slippery walkways that lead to liability claims


  • Insecure pool gates or fences


  • Easily preventable thefts from unlocked access points or poor lighting


What these all have in common is not just their preventability, but the lack of systems in place to help homeowners reduce them.


Why Does This Still Happen?


Given the clear financial case for prevention, it’s worth asking: why hasn’t the industry made more progress on reducing these types of losses?


There are a few core reasons.


There’s No Preventive Infrastructure


In other parts of life, like healthcare or vehicle maintenance, we’re guided by regular checkups, schedules, and reminders. But for homeownership, there’s no widely adopted playbook. Most people don’t know when to clean a dryer vent, test a sump pump, or replace a shutoff valve until something goes wrong.


This lack of structure makes it difficult for even well-intentioned homeowners to stay ahead of risk.


Insurers Lack Ongoing Visibility


Once a policy is written, the insurer’s line of sight into that property is minimal. Without an inspection or claim event, there’s little structured information about the home’s condition over time.


This isn’t about surveillance. It’s about giving homeowners and insurers shared access to meaningful signals, like maintenance progress, system aging, and safety upgrades, that can inform better decisions and reduce risk on both sides.


Incentives Are Difficult to Activate


Even when carriers offer risk reduction programs or premium incentives, many homeowners don’t know about them, or don’t understand what actions are required to qualify. The result is low program participation and missed chances to reinforce positive behavior.


All of this leaves the industry caught in a cycle of reactive payouts and fragmented engagement, while homeowners remain largely unsupported in managing their most valuable asset.


From Challenge to Opportunity


This is more than a claims problem. It’s a service, trust, and information challenge, and also a tremendous opportunity.


The industry already knows that prevention works. What’s needed now is a practical, scalable way to help homeowners take action, while giving insurers clearer insight into their portfolio.


This is where Rafter comes in.


The Rafter Approach: Making Prevention Work for Everyone


Rafter helps insurers offer their policyholders a preventive home maintenance membership that’s designed to be simple, effective, and actionable.


We combine expert guidance, in-home support, and technology to:

  • Help homeowners identify and address common risks before they escalate


  • Guide them through maintenance tasks using prioritized checklists and clear recommendations


  • Provide vetted support when work needs to be done


  • Track and validate progress through a digital home health record


For insurers, this means a new kind of engagement. One that brings:

  • Lower claim frequency and severity


  • Happier, more loyal customers


  • Real-time, structured insight into home-level risk without intruding on homeowner privacy


It’s a solution that respects the homeowner, serves the insurer, and reduces waste across the system.


The $47 billion question isn’t whether preventable loss exists. It’s what we’re going to do about it.

Let’s shift from payout to prevention—together.

Rafter can help. Reach out to learn more.

From a Black Box to Real-Time Insights: Unlocking the Next Frontier in P&C Loss Prevention

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