What exactly is a fire alarm? What is required to satisfy the requirements of a fire alarm as a protective safeguard? A recent case decision finding that a motion detector that acted very much like a fire alarm still may not technically satisfy the policy and application requirement of an automatic central fire alarm.1
The policy provided:
A. The following is added to the Property General Conditions in Section I – Property: PROTECTIVE SAFEGUARDS
1. As a condition of this insurance, you are required to maintain the protective devices or services listed in the Schedule above.
2. The protective safeguards to which this endorsement applies are identified by the following symbols:
b. “P-2” Automatic Fire Alarm, protecting the entire building, that is:
(1) Connected to a central station; or
(2) Reporting to a public or private fire alarm station.
e. “P-9”, the protective system described in the Schedule.
B. We will not pay for loss or damages caused by or resulting from fire, if prior to the fire, you:
1. Knew of any suspension or impairment in any protective safeguard listed in the Schedule above and failed to notify us of that fact; or
2. Failed to maintain any protective safeguard listed in the Schedule above, and over which you had control, in complete working order.
Facts indicated that the building had a motion detector that was activated the night of the fire. The court noted the contentions of each party:
New Hamilton argues the PSE is ambiguous because its ‘automatic fire alarm’ requirement reasonably has multiple interpretations. New Hamilton asserts that under the PSE, an ‘ ‘automatic fire alarm’ was only required to be a system that ‘protected the entire building’ and, without human intervention, reported to a ‘central station.’ ‘…New Hamilton argues its alarm system met those requirements because (1) the system detected motion and radiating heat energy; (2) it did so seconds after the fire was ignited; (3) the system reported numerous alarms to National Alarm’s central station; (4) National notified the police, who notified the fire department; (5) the fire department arrived at the building within seven minutes of the system’s first alarm; and (6) the fire department ‘controlled’ the fire within ten to fifteen minutes of arrival. Essentially, because its motion sensor alarm system detected the fire in the building and alerted National Alarm that there was motion inside the store, New Hamilton argues it was an automatic fire alarm.
AmGuard argues that New Hamilton’s motion-sensor alarm system was a burglar alarm that was automatic. AmGuard emphasizes that the system was not designed to alert for fires and did not protect the entire building. It points to National Alarm’s Customer Activity Report from August 28, 2016, which registered that a burglar alarm and a motion detector had been activated—indicating suspicion of an intruder, not of a fire. This is why, AmGuard argues, National Alarm contacted the Detroit Police Department and not a local fire department. AmGuard notes ‘[t]here was no direct contact between National Alarm and the Fire Department.’…AmGuard argues that even if New Hamilton’s burglar alarm system did activate during this fire, it does not constitute an ‘automatic fire alarm’ in the plain, everyday understanding of a fire alarm.
The court found that a motion detection system was not the “fire alarm” system required under the policy and ruled for the insurance company with a finding of no coverage:
[T]he PSE required business owners to install an automatic fire alarm protecting the entire building that either (1) connected to a central station, or (2) reported to a public or private fire alarm station. A reasonable person with an ordinary understanding of the English language would understand the phrase ‘automatic fire alarm’ to mean an alarm that is designed to detect fires and alert any nearby persons to the fire. This comports with the various dictionary definitions of ‘fire alarm’ found in Merriam Webster, the Longman Dictionary, and the Oxford English Dictionary, each of which emphasizes the function of a fire alarm system as warning people about the danger of a fire through a loud noise.
Protective safeguards are often part of underwriting questionnaires and policy requirements. Wrong or inaccurate information about these safeguards and their working condition can lead to post-loss denial of claims. Agents and policyholders should be careful when answering questions during the application process to prevent post-loss underwriting issues resulting in a denial of coverage.
Thought For The Day
Morning comes whether you set the alarm or not.
—Ursula K. Le Guin
1 New Hamilton Liquor Store v. AmGuard Ins. Co., No. 20-2189, 2021 WL 5974158 (6th Cir. Dec. 16, 2021).