Vacancy/Occupancy Clauses in Property Insurance

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Protective Safeguards Endorsements – Issues and Implications

By Robert J. Prahl, CPCU

What is a protective safeguards endorsement and what are its implications for an insured? Typically, a protective safeguards endorsement states that insurance will be suspended if the insured fails to provide immediate notice to the insurer when it becomes aware of any lapse or impairment of any protective safeguard device identified in the policy. It also suspends insurance if the insured fails to maintain any such protective device. The attachment of this endorsement, therefore, imposes a responsibility on the insured to ensure that the device will be operational if and when a loss occurs. Clearly then, there are implications for the insured if the device is for some reason inoperable at the time of a loss.

In an effort to demonstrate how the courts view these endorsements, a sampling of court cases is included later in this article.

Usually, when a commercial building is equipped with a protective safeguard device, an underwriter will attach a protective safeguards endorsement to the policy. Protective safeguard devices or services may include automatic sprinkler systems, automatic fire alarms, security guard services, fire or burglar alarms, or similar devices. Many insurers offer a discount when such an endorsement is attached to the policy.

Both the American Association of Insurance Services (AAIS) and the Insurance Services Office (ISO) offer standard protective safeguards endorsements. The ISO endorsement (Form CP 04 11 10 12, formerly IL 04 15 04 98), for example, includes a schedule identifying the specific protective devices involved. The devices are identified by symbol. For example, P1 refers to automatic sprinkler systems, P2 to automatic fire alarms, and P3 to a security service with a recording system or watch clock, and so on.

Usually, when a commercial building is equipped with a protective safeguard device, an underwriter will attach a protective safeguards endorsement to the policy.


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