Businessowners and homeowners: does your insurance policy contain a “Protective Safeguards” endorsement? If so, there are a few requirements you absolutely must meet if you want to protect your ability to be covered in the event of a property loss.
Protective Safeguards apply to both business and homeowner policies. Essentially, the insurance company will give you a reduction in your policy premium if you promise to undertake certain precautions that protect your property from a loss.
What are these precautions you promise to implement? Usually preventive devices or measures, such as smoke alarms, burglar detection systems and sprinklers.
Pretty good, huh? All you have to do is make a promise, and the insurance company will reduce your premium.
Not so fast! If you promise to undertake any Protective Safeguards, then you absolutely MUST do so. No exceptions!
Don’t believe us? Check out this cautionary tale: A BBQ restaurant in the city got a reduced premium because the owner accepted a Protective Safeguard in exchange for his promise to install cutting-edge smoke alarms. After a property loss due to fire, insurance investigators determined that the BBQ restaurant did not, in fact, have any smoke alarms installed.
So, the owner took the benefit of the Protective Safeguard (for smoke alarms), but did not install the protections he should have. The result? A complete denial of the owner’s ENTIRE claim.
A lot of restaurants have Protective Safeguards for ANSUL systems (which get the smoke out of the kitchen). Restaurants that get a reduced premium in exchange for an ANSUL Protective Safeguard are obligated to clean the system regularly to get the benefit of the reduced premium. And you must provide documentation of this regular cleaning if you are trying to recover on a claim. So be sure to keep all service records.
So, when you get an insurance policy for your business or home, look to see if you have a Protective Safeguard endorsement. Your agent may propose this as a way to save you money. It’s a good strategy – but don’t fall into the trap of just saying you’ll undertake the protections to get the credit. You also have to deliver on that promise. Make sure you have installed the devices and protections that you claim.
Remember: a local insurance agent will not only help you save money, but will take the time to fully explain your policy and ensure you have full and adequate coverage.