A fire that destroyed a 100-year-old mansion in Grosse Pointe Park, Michigan on May 16 was so intense that several local fire companies were required to help douse the flames. Thankfully no fatalities or serious injuries were reported, though two responding public safety officers sustained minor injuries. Two months ago and less than a mile away, a five-alarm fire started in a Michigan home that quickly spread and consumed two neighboring homes as well.
These cases had more than geography in common—both involved homes that were undergoing renovation. Investigations are still underway, but in the most recent case the local fire chief pointed to a torch used by a member of the renovation team as the likely cause of the blaze.
Whether in Michigan or around the world, fires represent a substantial danger whenever renovation projects are underway. In April, the world watched in dismay as France’s famed Notre Dame Cathedral erupted in flames while undergoing a $6.8 million renovation.
“…Fires can financially devastate homeowners and contractors alike. Both groups are best served by…investing in appropriate insurance coverage.” — Mary Mullen, Burns & Wilcox
“Buildings under construction or renovation are at their most vulnerable and weakest condition,” according to the U.S. Fire Administration. When fires occur in homes under renovation, they can quickly escalate. “Many commonly used construction materials are highly combustible,” said Mary Mullen, Regional Practice Group Leader, Personal Insurance, Burns & Wilcox, Chicago, Illinois.
In addition to posing physical danger to those on or near the site, such fires can financially devastate homeowners and contractors alike. Both groups are best served by combining careful fire prevention strategies with investing in appropriate insurance coverage, Mullen said.
Understanding the threat
Amid a healthy housing market, spending on home improvement projects in the United States has increased more than 5 percent per year since 2013, according to Harvard’s Joint Center for Housing Studies. While that pace is expected to slow by early 2020, Americans will still spend nearly $350 billion on projects next year. Canadians, meanwhile, spend more than $70 billion on renovations each year, outpacing their spending on new homes.
Welding torches, cutting torches, soldering equipment and other “hot work” tools used in renovation and construction cause an estimated 1,860 U.S. house fires per year, according to a 2016 study by the National Fire Protection Association. Other causes run the gamut from cooking and heating equipment to smoking materials to arson.
Prevention – the first line of defense
As with most preventable disasters, careful planning is essential to avoid fires. The U.S. Fire Administration suggests conducting a risk assessment and creating a fire-response action plan before the project begins. This process includes verifying escape routes and properly storing flammable and combustible liquids, among other steps.
Throughout a renovation project, contractors should hold regular safety meetings involving all workers to discuss risks and ensure the entire work site is maintained in a clean and safe manner, said Marc Adler, Managing Director, Burns & Wilcox Brokerage, Scottsdale, Arizona. “For example, a roofer or anyone dealing with a flame or a heat source should make sure that debris and other incendiary items are not lying around and the heat source is constantly monitored.”
“Homeowners should not assume that safety is the sole responsibility of whomever they hire to do the work.” — Mullen
Fires are not the only threat to homes undergoing renovation: these homes also make attractive targets for thieves. Proper fencing and other security measures can help prevent third parties from damaging property or walking away with equipment, tools and other valuables, Adler said, and may keep children away from potentially dangerous situations. Depending on the size and nature of the project, motion-sensitive lighting or even a nighttime security guard may be necessary.
While such steps represent best practices for contractors, homeowners should not assume that safety is the sole responsibility of whomever they hire to do the work, Mullen advised. Homeowners should not only demand that contractors employ sound prevention practices, they should follow suit.
Homeowners should make sure, for example, that fire extinguishers (10 pounds or larger) are on every floor of the home, said Mullen, and should insist that home sprinkler and alarm systems remain active throughout the duration of the project. “(Some) contractors want to turn off (sprinklers and alarms) because sawdust can create false alarms,” she said. Instead, she advised, contractors can implement preventive measures to minimize false triggers while keeping systems in operation.
Maintaining proper insurance coverage is essential
Even the best prevention steps cannot guarantee a fire or other problem will not occur during renovations, so it is important for homeowners and contractors to make sure they have appropriate levels of insurance coverage.
Homeowners should not assume that their existing Homeowners Insurance policy would fully cover them in case of a fire, especially if they are living elsewhere while renovations are underway. Generally speaking, “a Homeowners Insurance policy covers you for an owner-occupied residence,” Mullen said. If you are not living in the house at the time of the fire, the amount of your settlement could be greatly diminished or your coverage could be voided entirely.
“The biggest mistake I see is (business owners) signing contracts before (consulting) their insurance broker or agent to determine whether they are in compliance with the requirements (of the contract).” — Marc Adler, Burns & Wilcox Brokerage
Contact your insurance broker or agent before starting any large renovation project to ensure you understand the risks, limits and coverage options available. “Be prepared to share your budget, your time frame, the scope of work and where you will be living,” Mullen advised. Your broker or agent may be able to offer a Course of Construction Endorsement for 25 to 50 percent above your usual premium to provide you with comprehensive coverage, she said. If your broker or agent does not offer such coverage, he or she will likely be able to suggest other carriers or options.
Additionally, Mullen said, “(Homeowners) should always request the contractor’s current certificate of insurance and make sure that the total per-occurrence limit meets or exceeds the total insurance value of their house – that means the value of the house plus (its contents).”
Contractors who undertake home renovations are generally covered by Builders Risk Insurance and General Liability Insurance. Builders Risk Insurance coverage includes damage to both the existing home and to the project in case of fire, theft or other mishap. General Liability Insurance coverage includes such incidents as bodily injury to a bystander, among others. Injuries to workers are usually covered under Worker’s Compensation.
As with homeowners, the most important step for contractors is to speak frequently with their insurance broker or agent to make sure their policies and limits are adequate to cover all of the work they do. This is especially true for contractors taking on projects involving work that is new for them.
“The biggest mistake I see is (business owners) signing contracts before (consulting) their insurance broker or agent to determine whether they are in compliance with the requirements (of the contract),” Adler said. “(They may) not have coverage for that particular type of job, or they may just not have the endorsement required by the contract.”
As with any coverage need, an insurance broker or agent must be consulted. Click here to forward this article to your insurance broker or agent to ask if you need this coverage, or share this with clients to start the conversation and ensure proper protection.
This information was provided by Burns & Wilcox, North America’s leading wholesale insurance broker and underwriting manager. Burns & Wilcox works exclusively with retail insurance brokers and agents to assist clients like you with their specialty insurance needs. Ask your insurance broker or agent about Homeowners Insurance endorsements, Builders Risk Insurance, or General Liability Insurance policies that might be right for you.