Sprinkler Systems, Fire Alarms & Burglar Alarms: "have your actions eliminated coverage?"

January 29 2024

Categories: Business Insurance

Sprinkler Systems, Fire Alarms & Burglar Alarms:

Understanding Protective Safeguards Endorsements (PSEs)

Protective safeguards include items such as automatic sprinkler systems, central station fire or burglar alarms, or any security device designed to prevent damage to property. 

A protective safeguards endorsement included on a property insurance policy makes it a condition of coverage that the protective safeguards cited in the endorsement be in operation at ALL times except when the insurer has been notified of an impairment in the protection.  Insurance conditions are policy requirements that must be met for the coverage to be valid.

Failure to maintain the protective safeguards in good working order or failure to notify the insurer of even a temporary impairment in protection can eliminate coverage until the protection is restored.  For example, if a fire damages a manufacturing facility and a subsequent investigation finds that the sprinkler system wasn't functioning properly, an insurer may deny coverage.  

Obligations For Policyholders

PSEs have a variety of obligations for policyholders. Essentially, if you have a PSE in your policy, you are responsible for:

  • Monitoring protective devices and keeping them in proper working order; and
  • Notifying the insurer promptly of any malfunction or impairment of protective devices or services listed in the PSE over which they have control.

Beyond these obligations, there are several benefits to PSEs. Notably, since PSEs reduce property damage due to fire, they can positively impact the cost of premiums. In many states, insurers provide a premium discount or credit when such an endorsement is attached to a policy.

Policies covering commercial property that include PSEs come with added responsibilities for policyholders.  Typically, the following annual tests are required:

  • annual sprinkler system inspection and testing by a licensed sprinkler contractor
  • City or Township municipalities may require Back Flow testing by a licensed plumber
  • annual alarm testing by your contracted provider

Ensure that protective devices and services are well-maintained and functioning as intended, and notify insurers immediately if there are any suspensions or impairments to these devices and services.  By taking these necessary steps, property owners can better protect their interests and ensure they have the coverage they need when it matters most.

Need help understanding your policies?  Contact Koppinger & Associates today
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