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Understanding the Significance of Sprinkler Impairment Notifications

Understanding the Significance of Sprinkler Impairment Notifications

When it comes to safeguarding your property and ensuring coverage for potential losses, maintaining and reporting the functionality of your fire protection systems is critical. Anytime that any part of a Fire Protection System is out of service for 4 hours or more, it is important that the impairment is immediately reported to the carrier.

For properties equipped with sprinkler systems, most insurance policies include a Protective Safeguards Endorsement. This endorsement places a responsibility on the insured to properly maintain and test these systems and promptly report any impairments exceeding four hours.

When a policy is rated as being protected by sprinklers and underwritten accordingly, it is crucial that insureds and agents fulfill their duty to notify the carrier of any system impairments. Failure to do so can lead to a range of serious consequences, including:

Coverage Denial: In extreme cases, when an impairment goes unreported, it could result in a denial of coverage in the event of a loss. Insureds and brokers must understand that by neglecting to notify carriers about sprinkler impairments, they risk not only financial losses but also potential liability and business disruption.

Carrier Placement: In many instances, the insured is with a carrier that only writes sprinklered properties. Without a properly maintained and active sprinkler system in place it can cause issues with the insurance placement. It can affect reinsurance arrangements, potentially jeopardizing the insurer’s ability to cover losses adequately. Timely notification ensures transparency and maintains the integrity of the insurance program.

Market Disruption: The marketplace for insurance coverage relies on accurate risk assessment. Failing to report sprinkler impairments can disrupt this process, making it difficult for carriers to provide accurate pricing and offer competitive rates for well-protected properties.

To ensure the smooth operation of fire protection systems and protect your coverage, it is vital that we work together to educate all stakeholders on the importance of reporting impairments. This includes clients, trade partners, mill operators, and employees who play a role in maintaining and operating these systems.

Reporting sprinkler impairments is a straightforward process. Insureds can use the Sprinkler Impairment Form available in our Risk Assessment Toolbox. If you have any questions about a potential impairment or need assistance with the reporting process, please do not hesitate to contact Corey Bounds at corey@contund.com. We are here to support you and ensure the smooth handling of any impairments you may encounter.

By understanding the critical nature of sprinkler impairment notifications and actively participating in the reporting process, insureds and brokers contribute to the stability of the insurance marketplace. Timely reporting not only protects your coverage but also helps maintain accurate risk assessments, competitive pricing, and uninterrupted access to insurance markets. Let’s join forces to prioritize the safety and security of our properties by ensuring that fire protection systems remain fully functional and any impairments are promptly reported.

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Continental Underwriters, Inc.

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Continental Underwriters, Inc.

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