How the Insurance Industry Factors into the Construction Fire Safety Equation

Raymond O’Brocki

August 22, 2022

During the National Fire Protection Association’s 2022 conference, I had the opportunity to take part in a panel discussion entitled “Fires in Buildings Under Construction: Closing the Insurance and Fire Protection Gap.”

It was a spirited discussion on a critically important – and potentially costly – subject. It’s no secret that the window when construction is complete and the building is conditioned, and when the time is ripe to turn on the automatic sprinkler system.

This is a period of vulnerability for buildings nearing the end of construction, and there are several cases that illustrate the point. Take for example the fire that tore through an 88-unit apartment project in Somerville, New Jersey, in the summer of 2020 that led to $16 million in damage. In 2017, a seven-story multi-family project in College Park, Maryland, caught fire, causing $39 million in damage and closed the University of Maryland for an entire day.

What do these fires share in common? Even though the buildings in both projects were near completion, conditioned and had fully functional sprinkler systems, those protection systems in both locations were not yet turned on.

The panel discussion explored this gap from a variety of perspectives. I was joined by Justin Moseley, an underwriter manager; Joseph Amodeo, Risk Manager at Technical Risk Underwriters, and Kevin Carr, Senior Fire Protection Specialist for NFPA. Matt Hind-Aldrich, from the American Association of Insurance Services moderated the panel.

The discussion explored the risk facing builders and how insurance premium rates were calculated for projects and individual jobsites. From the insurance perspective, panelists outlined the balance that needs to be maintained between being reasonable in the requirements for selling products while also being strict enough to safeguard construction projects.

But the discussion ultimately navigated back to the point mentioned at the top – the protection gap and the question of when to turn on sprinkler systems. From the insurance perspective came the argument that in an effort to mitigate high premium costs and reduce the risk to insurers, deductibles have been increased on water damage (not caused by flooding) because it’s the leading cause of loss.

For developers, this has incentivized against turning on water until the last possible moment before handing the building over to the owner and charging the sprinkler system.

I’ve explored this issue in greater detail in an article for Fire Engineering Magazine. If you give it a read, you may agree there is no easy answer, no magic bullet for closing this gap. Sometimes, as in the College Park fire, the code at the time did not require the sprinkler system to be turned on while the building remained under construction.

A fire safety consultant source I spoke with also raised the question of whether industry leaders needed to collaborate to propose a national standard for a temporary sprinkler system that can protect against fire throughout construction. But this approach is also fraught with potential problems, from inadvertent water damage to freezing water pipes to questions of what happens if a temporary system fails to activate. Basically, this issue comes down to the fact there are differing opinions that have yet to yield a global solution. Until code and fire service officials come up with one, the best prevention is something we talk about all the time: Have a well designed and executable fire safety plan in place.