How Fire Protection Systems Can Lower Insurance Premiums

Property managers know all too well that fires are expensive. 

Recent data from the U.S. Fire Administration found that fires resulted in over $18.1 billion in property damage.

To safeguard your property (and your wallet), consider a robust fire prevention system. These systems not only keep you safe, but they can also save you money. A good system can help stop a fire in its tracks, keep fires under control, and even lower your insurance premiums. 

This article explains why insurance companies offer discounts for fire protection systems and how to maximize those savings.

A Look Into Fire Protection Systems and Their Link To Insurance Premium Discounts

Building owners and managers know that they need a high-functioning fire protection system to protect their people and property. But they might not know how much these systems could help them save on insurance costs. 

How are these two things connected? 

Let’s take a look.

Key Components of Fire Protection Systems

First, a quick recap on fire protection systems. 

Though each is custom to the location, industry, personnel needs, and workflows, most fire protection systems include: 

• Fire Alarms: Fire alarm systems detect smoke, heat, or flames and alert occupants to evacuate. 
• Sprinkler Systems: Activated by heat, sprinklers release water to control or extinguish fires, preventing their spread and cooling surrounding areas.
• Special Hazard Systems: These use special agents like foam, chemicals, or gases to extinguish fires in areas where water might cause damage or be ineffective.
• Fire Extinguishers: Portable fire extinguishers put out fires by removing oxygen, cooling the fire, or smothering the fumes. They protect your people, property, and ensure fire safety compliance.

Your building may also have enhanced communication systems, like Distributed Antenna Systems (DAS), to facilitate conversations between occupants and emergency services. 

How Insurance Companies Set Premiums for Commercial Properties 

Commercial property insurance rates are determined by complex factors that insurers carefully evaluate to assess the risk associated with a particular property. The primary factors considered include the building's construction, occupancy, protection, and exposure (COPE).

• Construction: Fireproof materials like brick or stone typically result in lower premiums compared to wood-frame structures. 
• Occupancy: How the building is used affects rates. For example, a welding shop may face higher premiums than an accounting office due to increased fire risk. 
• Protection Measures: Both public (such as proximity to fire stations) and private (like sprinkler systems and alarms) can help reduce rates. 
• Exposure: Proximity to external hazards, including natural disasters and crime rates in the area, is also factored in. 

Additionally, insurers consider the property's size, age, and overall condition, as well as the value of its contents. Insurers typically calculate rates by multiplying the total insurable value of the property and its contents by a factor that reflects the assessed level of risk.

The Connection Between Fire Protection and Insurance Premium Discounts

Property managers take on a lot of risk and liability—fires and the damage they cause are certainly on that list. 

That risk is something insurance companies weigh very carefully, as they are ultimately in the business of managing it. 

It stands to reason that properties with more advanced fire detection and suppression systems would be deemed lower risk; a feature that could be rewarded with reduced insurance premiums. 

Keep in mind that most insurance companies aren’t likely to dole out lower premiums for required fire safety compliance features. For example, if building codes dictate that your commercial property requires sprinkler systems, the insurance company isn’t likely to offer a financial incentive for simply meeting the code. 

Where they could offer discounts is in the advanced features, ones that aren’t necessarily required but go a long way toward amplifying the safety of your space. Think cutting-edge systems with IoT integrations, video features, and 24/7 professional monitoring. 

How Much Could You Save on Your Insurance Premiums? 

You know that advanced fire protection systems can help you save money—but how much? 

The answer depends on several factors, such as your location, building condition, and the COPE elements we discussed earlier.

Insurance premium discounts depend on the provider. Some insurance companies offer discounts when you have elements like automatic sprinklers and alarm systems. 

Keep in mind that proper inspections of these fire protection systems are critical for receiving “credit” from the insurance companies. Once your systems are up to snuff, you can usually request an assessment with your provider.

Routine maintenance and upgrades aren’t only necessary to potentially lower premiums; they are also vital for ensuring your claim isn’t denied in the event of a fire. Faulty systems due to lack of maintenance, poor retrofitting, inadequate repairs, or insufficient fire safety compliance could put your claim at risk and leave you with the brunt of the costs. That’s why finding a trusted partner to inspect and maintain your fire protection system is so important. 

By investing in comprehensive fire protection systems, property owners enhance safety and position themselves for potential long-term savings through reduced insurance premiums. This financial incentive, coupled with the primary goal of protecting lives and property, makes fire protection systems a critical consideration for any building owner or manager.

Additional Benefits of Fire Protection Systems Beyond Premium Savings

Investing in advanced fire protection systems offers numerous advantages beyond potential insurance premium reductions:

• Fire Safety Compliance with Fire Codes: Robust fire protection systems help ensure compliance with local and national fire safety regulations. This compliance enhances safety and helps avoid costly fines and legal complications that can arise from non-compliance.
• Enhanced Safety for Employees and Assets: Advanced fire protection systems significantly improve the safety of employees and visitors. Early detection and rapid response capabilities minimize the risk of injury or loss of life during a fire incident. Additionally, these systems help preserve valuable assets, equipment, and critical business data, reducing potential financial losses.
• Improved Business Continuity: Fire protection systems are crucial in maintaining business continuity. These systems help businesses recover more quickly from incidents by minimizing fire-related damage and downtime. This rapid recovery can prevent long-term disruptions to operations, preserve customer relationships, and protect the company's reputation.

Why Partner with Impact Fire for Effective Fire Safety Compliance and Protection Solutions

Fire protection is serious business. With people and property on the line, you deserve a trusted partner who can provide comprehensive, custom services for your unique business needs. 

Look for a company that can help you properly:

• Install and retrofit fire safety systems
• Conduct regular maintenance and inspections for fire safety compliance
• Monitor your space
• Meet or exceed local and national fire codes and regulations

With over 200 years of combined industry experience, Impact Fire's certified technicians have the knowledge and skills to design, install, and maintain cutting-edge fire protection systems.

Don't leave your fire safety to chance. Contact Impact Fire today for a consultation on how our tailored fire protection solutions can enhance your safety measures, ensure compliance, and potentially lower your insurance expenses.