What are Protective Safeguard Endorsements?

And Why Do They Matter

An issue likely to plague many policyholders in the wake of the Nor-Cal fires is whether the property contained all of the protective safeguards the policy requires.  

Many insurance companies issue policies with Protective Safeguard Endorsements that require insureds to maintain certain fire safeguards as a condition of coverage.  Protective safeguards can include fire sprinklers, smoke and fire alarms, fire motion sensors, and more.

Protective Safeguard Endorsements can be disastrous if not complied with.  The endorsements typically apply to exclude coverage for any loss that was designed to be avoided by the specific safeguard.  For example, if the endorsement required fire sprinklers but the property lacked them, then there is likely no fire coverage.

Additionally, these endorsements also require policyholders to maintain the safeguards in complete working order, and if they are impaired, to notify the insurance company.  If those requirements are not followed, the claim can be denied.

Protective Safeguard Endorsements are, unfortunately, a frequent reason claims are denied.  In some cases, the denials can be challenged even if the property lacked the required safeguard.  In other cases, the insurance broker may be to blame.  Brokers often specifically add these endorsements for their clients because they lower the premium.  However, they often do not tell the insured about them or check to see if the property truly has the required safeguard.  In these situations, there may be grounds for a lawsuit against the broker for negligence.