Does Your Policy Have a Protective Safeguards Endorsement?
The title of this endorsement makes it sound like something you might want, right? “Protective” and “safeguard” are both positive words. In actuality, it’s an endorsement on a property policy that can exclude coverage in certain scenarios. If any of the buildings you’re insuring have one, or a combination of the following types of protective safeguards, there’s a very good chance this endorsement is attached to your property policy:
- An automatic sprinkler system (P-1)
- An automatic fire alarm (P-2)
- A security service (P-3)
- A security contract (P-4)
- An automatic commercial cooking exhaust and extinguishing system (P-5)
- Any other protective safeguard that could be specifically described on the endorsement (P-9)
To view more detailed descriptions of each of the above protective safeguards as shown on an actual ISO endorsement (CP 04 11), click here.
So what does this endorsement mean to you? If you fail to adequately maintain any of the above protective safeguards at your manufacturing facility and you suffer a loss caused by a fire, coverage for that fire loss can be denied by your insurance company. Additionally, if you knowingly turn off or suspend any of the above protective safeguards, even if for routine maintenance, and you don’t notify your insurance company of this suspension, a loss caused by fire during this suspension can be denied. As is typically the case with insurance, there’s an exception to these provisions. If there’s partial “breakage, leakage, freezing conditions or opening of sprinkler heads” to a P-1 or P-5 protective safeguard and you’re able to restore it to full protection with 48 hours, there’s no need to notify your insurance carrier.
Because of the potential coverage gaps that can be created by this endorsement, it’s very important for you to know if it’s attached to your policy or not and if it can be removed or not. If it cannot be removed, you must have an internal process in place where any type of shut down or suspension of a protective safeguard device is immediately communicated to your insurance agent who will then notify your insurance carrier accordingly. As you can see, communication with your insurance professional is key when it comes to minimizing your risk.
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