How Insurance Companies Handle Fire Sprinkler Malfunctions
An effective fire sprinkler system can save lives, reduce injuries, and limit property damage. And it might also lower your insurance premium.
Automatic extinguishing systems (AES) such as water-based fire sprinklers may create savings for insurance companies if they extinguish or contain fires until firefighters arrive.
However, if sprinklers discharge accidentally, it might cause unnecessary water damage. And if they fail to operate, it might exacerbate damages suffered.
So how do insurance companies handle fire sprinkler malfunctions?
In this article, we’ll examine if it’s worth installing fire sprinklers for insurance purposes. We’ll also look at the most common causes of fire sprinkler malfunctions and how it’s treated by insurance companies.
Is It Worth Installing Fire Sprinklers for Insurance Purposes?
Institutions like nursing homes, hospitals, prisons, and educational buildings typically contain fire sprinklers. They are also common in factories, warehouses, and offices.
Businesses often install fire sprinklers as a way to reduce costly insurance premiums. But the impact of sprinklers goes far beyond commercial considerations.
According to the National Fire Protection Association (NFPA):
- Civilian deaths per 1,000 fires: 0.8 in properties with sprinklers and 6.3 in properties without sprinklers. The death rate is about 87% lower in properties with sprinklers.
- Civilian injuries per 1,000 fires: 23 in properties with sprinklers and 31 in properties without sprinkles. The injury rate is about 27% lower in properties with sprinklers.
- Firefighter injuries per 1,000 fires: 20 in properties with sprinklers and 61 in properties without sprinklers. The injury rate is about 67% lower in properties with sprinklers.
Most homeowners don’t have fire sprinklers installed. However, as pointed out by NFPA, this might be a huge oversight:
“Most structure fires and fire deaths occurred in residential properties, particularly homes, but only 8% of the reported residential fires were in properties with sprinklers.”
Research conducted by NFPA shows that sprinklers operate effectively in about 88% of fires that are large enough to activate them. In about 8% and 4% of fires, they fail to work or are ineffective, respectively.
Not all insurance companies offer discounted premiums for fire sprinklers, but most do. To qualify for a discount, the sprinkler system typically has to meet the National Fire Protection Association standard NFPA 13.
Note for California: Refer to California Code of Regulations, Title 8, Section 6170, which deals with automatic sprinkler systems, and California Code of Regulations, Title 24, Section 903.3, which deals with the installation requirements of automatic sprinklers.
Causes of Fire Sprinkler Malfunctions
There are mainly two types of fire sprinklers, namely wet pipe sprinklers and dry pipe systems. Wet pipe sprinklers are the most popular type. They hold water that’s ready to discharge should the need arise.
In most cases where fire sprinklers fail to operate or aren’t effective, it’s due to human error and not a sprinkler malfunction.
Studies have shown that in three of every five incidents in which sprinklers failed to operate, it’s because they were off.
In addition, they are often shut off prematurely. Instead of waiting for the fire department to arrive, they are turned off before they can contain a fire. It often happens when someone thinks it’s a false alarm or that a fire is not serious enough to justify leaving the sprinklers on.
NFPA research suggests that 10% of sprinklers fail due to a lack of maintenance and 7% thanks to damaged components. Corrosion often plays a big role.
A study by Potter Corrosion Solutions found that 73% of dry systems have significant corrosion issues after about 12 years. Left untreated, it might cause leaks and unintentional activations.
Insurance Companies and Fire Sprinkler Malfunctions
When you file an insurance claim for a covered event such as fire damage or water damage, your insurer will appoint an insurance adjuster to handle the claim.
Water damage from a sprinkler system used to contain or extinguish a fire is generally covered by insurance companies. But always refer to your insurance policy to verify that you’re covered.
However, as previously mentioned, if sprinklers discharge accidentally, it might cause unnecessary water damage. And if they fail to operate, it might exacerbate damages suffered.
An insurance adjuster, usually, looks after the best interests of your insurance company, not your best interests. Their goal is to minimize the liability of your insurer who employs them.
Where your insurance coverage is conditional on having a fully operational fire sprinkler system in place, and an insurance adjuster determines this wasn’t the case, your claim might be denied.
Your insurance company will typically add a “Protective Safeguards” (or similar wording) endorsement to your policy. It usually states that you won’t be paid for losses or damages caused by a fire if you:
- Knew a protective safeguard such as a fire sprinkler system wasn’t working and failed to notify your insurance company, or
- Failed to maintain the protective safeguard and didn’t keep it in working order.
Managing a large or complex insurance claim, especially one involving a fire sprinkler dispute, can be a nightmare.
Trying to reason or negotiate with an insurance adjuster appointed by your insurer is often fruitless. They typically have years of experience handling insurance claims and don’t act in your best interests. In the majority of cases, you might be out of your depth.
You need someone on your side who can even out the playing field. Someone with the necessary knowledge and skills who knows how to deal with insurance companies and insurance adjusters. It is why we highly recommend that you contact a public adjuster.
A public adjuster acts in YOUR best interests, not the best interests of your insurance company.
An experienced, reputable, and licensed public adjuster can help you overcome the challenges of managing your property insurance claim. They can assist you in getting the best possible settlement offer you’re entitled to under your insurance policy.
Avner Gat, Inc. has 17+ years of experience as a public adjuster in Southern California. We protect homeowners from the games and fine print that insurance companies are known for.
Call us at (818) 917-5256 to find out how we can assist you.