Often when there is a fire loss, the owner of the premise has insurance and the carrier denies liability because there is no fire alarm system installed.
In a recent case in the state of Louisiana, the defendant company hired an individual agent to assist in procuring an insurance policy for its property. The agent submitted an insurance proposal to the company and several of its representatives. The proposal contained several quotes for insurance coverage, including the plaintiff’s policy. The plaintiff insurance company’s proposal specifically stated “Warrants and representatives: Central Station Burglar and Fire Alarms.” The defendant company subsequently informed the representative that it had selected the plaintiff’s policy. Shortly thereafter, the defendant’s president executed an Acord Commercial Insurance Application on behalf of the defendant. In the application, the defendant representative warranted that he was “an authorized representative of the applicant” and represented that reasonable inquiry had been made to obtain the answers to questions on the application. In response to a question concerning the property itself, the company representative indicated that the premises had a central station fire alarm. The defendant company then informed the agent that his services were no longer required. The insurance company delivered its policy to the defendant, which included an exclusion for “Protective Safeguards” — including a central station fire alarm. The policy also included the following language: “We encourage you to read your policies to familiarize yourself with the policies terms, endorsements, exclusions and conditions as these affect your coverage.”