Exclusively from Foa & Son
Unless you are dealing with certain specialized types of insurance (professional liability, malpractice, director and officers or employment practices liability being common examples) you’ll rarely run into policy warranties. Underwriters for the aforementioned types of policies rely on your accurate information in the policy application, and usually include a warranty provision in such policies that if the information in the application turns out to be inaccurate or wrong they can cancel the policy and void coverage, even after a loss has occurred and a claim reported.
Policy warranties are usually not found in general property and liability policies. There is one important exception, though, found in property policies, that you need to know about and keep in mind.
It is very common for property insurance policies covering buildings with sprinkler systems, fire and burglar alarms and other safeguards to include a Protective Safeguards endorsement. This is a short (a page and a half) endorsement, but with powerful effect. Essentially, you are warranting that you have a sprinkler or other described protective system in your building, that it works, and that you will keep it turned on and in operating order.
Property insurance companies grant some pretty significant premium credits for sprinklered buildings in particular. They want to hold you to your word that the sprinkler system is actually in place to provide the protection they are relying on, and this is how they do it. If you know of an impairment or suspension in the system and don’t notify the insurance company, or if you fail to maintain the system in complete working order, and a fire occurs, the insurance company has grounds to deny coverage.
Standard wording of these endorsements states that if part of the system has to be shut off due to “breakage, leakage, freezing conditions or opening of the sprinkler heads”, you don’t have to notify the insurance company as long as you can restore full protection within 48 hours. If the system will be down longer than that, the insurance company must be notified. Notice, also, there was no mention of “maintenance” in there. If you have to shut off even part of your system for maintenance, repairs, or any other reason, you need to call us immediately.
The standard endorsement can also apply to other protective safeguards, including central station fire alarms, security services, private service contracts, or any other protective system. You might find these in your policy even if you don’t have a sprinklered building. Keep an eye out for it, and call us if you have any questions.