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Insurance company denies coverage in fire

Insurance companies can be allies in the fight for life/safety compliance. They have considerable power over property. If persons insured by the companies don’t live up to the standards of the policy, they may lose their insurance benefits.   A judge in Massachusetts has ruled that an insurance company does not have to pay for a fire that occurred at a restaurant because the owner did not properly maintain a fire suppression system. The Insurance Journal reports:

At issue is an exclusion in a commercial lines policy issued to the French King restaurant in Erving, which required the restaurant owner to maintain a fire suppression system. The insurer — Interstate Fire & Casualty Co., a subsidiary of Fireman’s Fund — claimed that the fire-suppression system installed at the restaurant was obsolete, and therefore triggered the exclusion and did not require them to indemnify the restaurant.

The court agreed and ordered the restaurant to pay back the $15,000 advance given to the owner before the investigation was completed.  I’ve always wished there was a separate registry of properties and their insurance companies so inspectors could alert the insurance company about dangerous conditions. (I make no comment as to whether this might violate privacy laws in some states).  Most owners will act so they don’t lose their insurance unlike the owner in this case.  The article said that the owner could have upgraded his system for $3,250. Unfortunately, fire inspectors have to repeatedly try and obtain compliance because of the real threat of fire while some owners only see the extra cost to themselves when asked to comply.

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