How to Negotiate with Insurers on Fire Hazards
An insurance company’s success is partially due to their ability to reduce its exposure to risk. Fire hazards are one of the risks that a building owner would want insured. To provide a building owner with insurance in cases of a fire, an insurance company’s fire protection standards help minimize the risk of an accident. Sometimes, for a building owner to meet an insurance company’s standards, the cost is prohibitive. But instead of foregoing insurance, there might be an alternative fire safety solution that can reduce risk for the insurance company and is more affordable for the business owner to implement. Fire protection engineering consultants can help to develop these types of win-win fire safety solutions.
Advocating for Practical, Cost-Effective Fire Protection
We recently helped a client circumvent unnecessarily high fire protection standards. The client’s facility held liquids that could burn, but weren’t “flammable” – a definition that requires strict protection measures that can be very expensive to implement. Unfortunately, the broadly defined, “flammable” liquids triggered the same level of fire protection required for kerosene.
The international fire insurer initially asked the client to deploy diking, containment, and strong sprinkler systems. However, our client was working with high flashpoint oils. The oils at their facility are extremely difficult to ignite, and if they did ignite, the ensuing fire would be easy to extinguish. We advocated on our client’s behalf to the effect that our client’s oils did not require the same level of protection as kerosene.
Ultimately, the insurance company agreed with us, and the client’s required level of fire protection was reduced accordingly. The insurance carrier also modified their standards to distinguish high flashpoint oils as a less significant hazard than typical “flammables liquids”. They recast their system and reduced fire protection standards for liquids with flashpoints greater than 500 degrees. The changes allowed our client to reduce their protection costs by implementing a more practical fire protection engineering solution.
Speaking the Fire Protection Engineering Language
One team member, Tom Dannaker, was crucial in our negotiations because he worked in the insurance industry for 37 years. His experience is invaluable to our clients who need effective advocacy on property loss control.
By Jeff Harrington , CEO and Founder of Harrington Group, Inc.