What You Need To Know About Fire Insurance Coverage
In the summer of 2023, wildfires in British Columbia continued to make news headlines. As of July 22, CBC reported that 248 fires were burning throughout the province. People who live and work near the fires kept a watchful eye on fire safety news reports and air quality advisories.
In addition to natural disasters, electrical faults, burning candles, grease fires, and more can be a primary culprit of fire damage in your building.
Regardless of where you are in life in Canada, the possibility of smoke, soot, and flames from a property fire harming your staff and damaging your workplace is enough to keep any business owner awake at night. That’s where fire insurance coverage from an insurance company can provide you with peace of mind.
In addition to the costs associated with fixing fire-related damages, there is a good chance that your day-to-day business activities will be interrupted during the repairs. To avoid potential expenses incurred related to workplace fires, it is important that your business has adequate insurance coverage.
Fire insurance coverage is included as part of most property insurance policies for commercial buildings. However, it is important that you regularly review your commercial property insurance policy to ensure it provides the fire protection you need and that you are paying the right amount in premiums.
The Two Types of Fire Insurance Plans
1. Commercial Property Fire Insurance
This is the portion of your policy that kicks in to cover the building itself, including the equipment, inventory, raw materials, etc. When there is a loss of physical assets caused by a fire, this is what pays for replacement and repair costs.
2. Business Fire Insurance – Business Interruption or Lost Profits
In the aftermath of a fire, there may be a time period where you may not be able to conduct business, often due to a damaged workspace. This part of your policy will cover loss of revenue during the recovery period after a fire.
Based on your fire insurance policy and insurance provider, these coverages will offer different levels of protection. Review your peak inventory, replacement cost of your building, etc., to ensure that the amount of fire coverage is appropriate to your potential risks.
Fire Insurance Sprinkler System Credits
You can often reduce your premiums for fire insurance coverage by installing a sprinkler alarm system. With some fire insurance providers offering 10 to 60 percent discounts, systems can quickly pay for themselves. However, to get your full fire insurance credit, your system must be reviewed and approved by underwriters.
Get Inspected and Save Money With Your Insurance Company
According to the Insurance Services Office, Inc. (ISO), many organizations receive little or no credit on their fire insurance coverage for having a fire sprinkler system in place. This is because the facility and the sprinkler system have not been properly inspected in order to provide full credit. Certain insurance companies will gladly inspect your facility and develop an accurate credit on your fire insurance, reducing your overhead costs and, in turn, increasing your bottom line.
The fire sprinkler evaluation process typically reviews the following areas:
- System design based on the requirements of occupancy
- Available water supply
- System installation and components
- System testing
- Inspection of areas of the building without sprinklers
- Building conditions affecting the sprinkler operation
- Necessary testing and certifications
Before receiving a credit, the following are typically reviewed or completed:
- Main Drain Test
- Copy of the Underground and Overhead Piping Hydraulic Test Certificate
- Dry Pipe Trip Test Results (systems with dry pipe valves only)
- Fire Pump Performance Test Results (systems with fire pumps only)
- System Design Criteria Evaluation (through a review of the sprinkler plans, hydraulic calculations or hydraulic data plaque information)
Contact your insurance adjuster or broker to understand the claims process and the compensation you’re entitled to as a business owner.
Count On ALIGNED’s Fire Insurance Expertise
When it comes to getting appropriate fire insurance coverage at the best price in the market, ALIGNED is here for you and your organization. Learn more about fire insurance and how you can receive credit for your fire sprinkler system. Talk to an ALIGNED advocate today about how we can help you secure the best products, services and solutions for your business.
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100% Canadian-owned, ALIGNED is a premiere insurance brokerage that serves more than 1,400 clients across the country. ALIGNED’s offices in Toronto, Calgary and Vancouver are supported by a national operations centre in Cambridge, Ontario. Uniquely within the industry, ALIGNED creates, negotiates and delivers the best business insurance and risk management strategies/solutions to organizations like yours.