The LWF Blog
Facilities Management & Fire Safety – Insurers & Property Protection – Part 16April 9, 2019 10:34 am
In LWF’s blog series for those who work in Facilities Management or who have an interest in or responsibility for fire safety, we have been looking at the impact of insurers on fire safety and property protection. In part 15 of this series, we looked at those areas of fire protection and fire safety which are considerably more important to a building’s insurer, rather than from a life safety point of view. In part 16, we continue from that point, before discussing business continuity.
Historically, insurers place greater emphasis on effective housekeeping and management of fire safety risks than an enforcing authority. However, with fire risk assessments for all premises now being a requirement, implementing good practice and management standards is now necessary across the board.
Site security and safe rubbish disposal (rather than storing potential combustibles outside or against the building) while important for both life safety and property protection are likely to be extremely important to a building’s insurers.
In addition, the attendance times of the Fire Service and provision of sufficient water supplies for firefighting efforts are more important from a property protection point of view than for life safety purposes, where it is likely the building occupants will already have evacuated the building in question.
Business continuity protection
In around 1900, insurance companies began to look more closely at the consequences of a fire to a business, in terms of continued operation of the business. They began to offer a form of protection known initially as ‘consequential loss’ insurance. In recent times, it has come to be known as ‘business interruption’ insurance.
The premise is fairly simple. If a fire takes place in business premises, traditional fire insurance policies will cover the immediate losses – rebuild cost, materials cost, equipment and stock cost etc., however it does not cover the period of time that the business is unable to fulfil its function. Business interruption insurance is designed to cover liabilities such as loss of profits, business outgoings such as rent, rates, wages and any additional expenses incurred due to attempts to keep the business running, such as temporary alternative premises.
In the 1960s and 70s, an increase in the use of data processing as a major business tool highlighted the need for consequential loss insurance. There being no such thing as ‘the cloud’, original data and its backups had a physical home and if that home was subject to a serious fire, the valuable data would be lost. While the need for business continuity had already been recognised by many firms in the years prior to this, the reliance of big business on data meant that it became an absolute essential to avoid significant financial collapse.
LWF will continue discussing the changes which placed a spotlight on business continuity insurance in part 17 of this blog series. In the meantime, if you have any queries about your own facilities or wish to discuss this blog series, please contact Peter Gyere in the first instance on 0800 410 1130.
Lawrence Webster Forrest is a fire engineering consultancy based in Surrey with over 25 years’ experience, which provides a wide range of consultancy services to professionals involved in the design, development and construction and operation of buildings.