The TRUE Cost of Faulty Fire Sprinklers

The TRUE Cost of Faulty Fire Sprinklers

The Maui wildfires and numerous local lithium-ion battery fires have highlighted the importance of fire safety!

Fires used to be rare occurrences that you would see on the news; however, because of warmer temperatures and the proliferation of e-bikes, fires now occur every day and the costs are life-changing!

Here in New York City, fire sprinkler installation was optional for decades until 1999, when it became a mandatory requirement for new and upgraded construction. 

NYC follows the National Fire Code NFPA-25, which requires monthly inspections of fire sprinkler systems, quarterly functionality testing and Annual Maintenance.

I own an independent insurance agency.  As a business owner, I must be aware of the various rules, regulations, responsibilities, liabilities, and negligence for NOT keeping up with fire safety upkeep and sprinkler inspections.  If I own or operate a property that others visit and/or accept rent from tenants, there is an obligation and expectation to manage the building with safety in mind. 

I don’t have to tell you that fire and smoke restoration costs are expensive and estimated at $4.70 per square foot!  Take the square footage of your building and do the math.  Most building owners think they can depend on their commercial insurance company and policy to pay in full in the event of a claim. 

Here are some insurance policy facts:

  1. ALL commercial and residential insurance policies have fire sprinkler leakage exclusions in the policy wording, meaning THEY WON’T PAY!
  2. Proving fully functional fire sprinklers up front can yield up to a 10% annual discount on commercial and residential insurance policy premiums.
  3. A limited market of insurance carriers will write a sprinkler leakage coverage endorsement should your sprinklers not work during a fire.

There is a lawsuit currently pending (sprinklers malfunctioned) from a 2022 fire in a commercial building in Queens insured by Nationwide.  There was a fire in the mixed-use building (a store on street level with apartments above) with $2 million in damage.  The insurance company didn’t intend to pay anything.  Upon further review, it was revealed that the insurance agent lied about passing sprinkler inspections on the original insurance application.  Now, both the landlord and insurance carrier are suing the insurance agent for negligence.  We are living in a litigious society!

You might be thinking, what does this all mean?  First, with over 30 years of insurance experience, I can tell you that insurance companies have gotten better at trying to wiggle out of paying claims. They have gotten pummeled by natural disasters while major carriers are pulling out of states, such as California and Florida, because of excessive claims. 

It is “Fool’s Gold” to think you can depend on insurance companies to pay in the event of a fire if you haven’t kept up with regular fire sprinkler safety inspections.  It might seem like a waste of money to pay for the inspections; however, it is MORE of a waste to NOT pay and roll the dice in this increasing fire environment with warmer temperatures and dryer climates.

The bottom line is the choice is yours!  For more information or a second opinion on your commercial or residential insurance policy, feel free to contact me at [email protected] or call 917-359-3985.  Our website is www.InsuranceDoctor.us. Complete the intake form for quotes.