The impact of the water crisis on insurance policies. The current water crisis is going to affect all industrial businesses. Including industrial property owners. What is the effect of this water crisis on your insurance policies? Specifically, the impact of a fire!
As the drought conditions continue to deteriorate, the shortage of water could materially affect the function or effectiveness of water-dependent firefighting equipment. Importantly, including sprinkler systems. The water crisis, therefore, requires yourselves to take additional precautions. i.e. To minimise the risk of loss or damage to property. A general policy condition in most insurance contracts. During these prevailing conditions, failure to take reasonable measures to safeguard property and lives could prejudice you in recovering from a loss event. And may also be in contravention of the regulations on safety in the workplace.
All businesses should take the following fire-related precautions:
- Premises need to have the correct number of fire extinguishers. Also, the right amount of fire hose reels and other requirements as required by local authorities.
- All fire-related equipment must be serviced and in good working order. Should the system be defective, at the time of the loss, the claim may fail. Records must show services and proof of the last service and test of the system (on-premises and elsewhere).
- Fire escapes must be working and labelled correctly.
- Staff need to be briefed and aware of what to do in case of a fire.
- Additional firefighting equipment and precautions are recommended.
Concerning sprinkler-protected property, the following conditions apply:
- Fire cover will respond during a period of intentional water cut-off, reduced water pressure or any form of water rationing by the Authorities. (Other than suspension of the water supply due to, for example, non-payment of accounts, etc.). All as a result of the prevailing drought conditions, that directly gives rise to sprinkler systems not performing their function or being ineffective during an event.
- You are still responsible for the maintenance of the sprinkler system and for ensuring that the system is in good working order. Your claim may fail should the system be defective, at the time of the loss.
- You must keep records and proof of the last service and test of the system (on-premises and elsewhere). In this regard, we encourage the closed-circuit test which does not require more or additional public water supply than already in the system.
- Should at the time of loss, the last date of service or the final test is out of cycle or out-dated, your claim may fail.
For further information, we recommend you contact your insurance broker.
The businesses and property owners in Epping Industria in Cape Town are lucky to have Epping Fire Station close by. Also, the active Epping CID who will jump into action should a fire occur. However, it is still the responsibility of the business and property owner to take all reasonable precautions to make sure a fire does not happen. One must work towards minimising the impact of the water crisis on insurance policies.