The Fire Sprinkler Roundtable

The results of the Homeowner’s Insurance Credit survey are linked to this month’s insurance blog.  There were a total of 79 responses, many with comments.  Most automatic fire sprinkler systems are garnering a discount of 1-10%.  These responses made up 58 of the 79.   You will note when reviewing the responses that there are vast differences even among the same insurance companies.  We have yet to learn if the differences are merely due to ratings based upon region, or if it could have something to do with type of construction, age of structure, etc.  This is still to be learned by NFSA and subsequently reported to our readers.
 
Please click the following link to view the full matrix of the response.  - August 2010 - Insurance Survey Results
 
Thank you, NFSA greatly appreciates the time spent answering and as promised we will be emailing the results to those that provided email addresses in their response.
 
                                                                                                John A. Viniello, President, NFSA

Many of our readers live in homes protected by residential fire sprinklers. In an effort to determine what credits for having fire sprinklers are given by insurance carriers, we ask that you take this short survey. NFSA is having discussions with several large insurance carriers and is seeking credits in excess of 20% for homeowners that have these protections. As an example, I receive a 19% discount from The Hartford.

Please click the following link to answer this short, five question Insurance Survey!

Thank you, NFSA appreciates your input and assistance. John A. Viniello, President, NFSA

One of NFSA’s member contractors recently set about to inquire of their insurance agent the affects of seeking coverage for the installation of fire protection systems in “residential” applications.  The following is the scenario outlining what they learned.  This leaves open more questions than were answered with many unknowns, especially in the areas of continued coverages and bottom line affect on total insurance costs.  We begin this new blog topic of Insurance in an effort to create some dialogue regarding anyone else’s experience with obtaining and/or paying for liability insurance for residential installations.

The following are direct excerpts from their report to your Association.I had a long conversation later on this morning with XXXXXXX, our Insurance Broker, who has received preliminary indicators from a major General Liability line carrier regarding your interest in seeking coverage for the installation of fire protection systems in “residential” applications.

This analysis is a good news/bad news scenario.

The good news first.

The carrier (not related in any way to XXXXXXX insurance company) would be able to offer the company an “unrestricted” policy for coverage in the design and installation of sprinklers in any type of residential building, whether it be single- or multi-family homes, townhouses, condos, apartments, and even track or custom homes. All other aspects of our G/L coverage would pretty much remain the same.

Now the bad news (worst case).

1. The carrier XXXX is a non-admitted carrier in our state (name omitted), which means there are additional fees to be included in their coverage cost that are imposed by the state.

2. The premium indications are running about $5-6k higher than our current annual premium cost for the same limits.

3. The existing XXXXX (ins co) policy has a 10% unearned premium cancellation clause, or about $6-7k cost if we were to terminate their policy and switch to another carrier to obtain the added residential coverage.

4. If we had to replace our current carrier there is no guarantee that XXXXX (ins co) would stay onboard with the remaining policies for Auto, Property, Workers’ Comp., etc. as our coverage was quoted as a comprehensive “package”.

5. Should the current carrier opt to cancel all existing coverage we would need to identify replacement carriers (if needed) to take over the existing XXXXX (ins co) policies mentioned in Item 4. These new provider replacement policies would most likely be at a higher short-coverage period cost.

6. From strictly a cash-flow point of view, only XXXXX (ins co) offers an installment method for remitting premium payments. All other carriers would require their premiums paid up-front.

7. XXXXXX (agent) has not approached XXXXXX (ins co) underwriting department as yet to determine what (if anything) they would do or how they would respond to such a request to remove and/or modify the existing policy to allow for residential installations.  Our agent believes it would be best to first hone-in on your specific interest in moving forward with this game plan.

In summary, if you do not have an issue with spending perhaps upwards of an extra $15-20k to revamp the current commercial insurance program package then we can address your request with XXXXX (current ins co) and see where things fall. XXXXX (agent) thinks that they may sway a bit in order to retain the entire package and allow some types of residential work but not an open ended policy change.

Editor’s Comment:  Considering the new residential sprinkler legislation and need for additional contractors to install residential systems, this is something many contractors should be researching at this time.  We are using the dialogue above to begin the new blog topic of Insurance.  Please click the following link and you will be taken to a portion of the NFSA website where you may read the blog and comment on your experiences or ask questions that may be answered by others who have gone through the process.