How to Coordinate Insurance Requirements?

MeyerFire University | FX104.05

By Joe Meyer, PE

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How do we coordinate insurance requirements with architects? 

This is usually an easy answer for a building owner, but it can be a very difficult answer for an architect. 

In this coordination item, I like to ask architects to confirm whether there are any insurance requirements that relate to fire protection for the building owner. 

Some building owners are insured by organizations that require FM global or XL GAPS standards. We want to know well before the project ever goes out to bed if either of these apply to our project. This also could be some third-party requirement too, or a custom-building owner standard. Same thing. We want to know if these apply well, before we go out to bid. 

A lot of architects I've asked looked at me like I've got two heads when I asked this question. Sometimes, I just get told to make an assumption and move on. That's a dangerous assumption to make. 

I once was helping a contractor bid a project and the project had no stated insurance requirements. Not on the plans. Not on the specs. Nowhere. It was only after we bid the job, won the job, and fully designed the shop drawing set, and it was put in front of an FM reviewer who gave us a number of comments. We didn't even know it was an FM job. That comment mostly dealt with noncompliance with FM global data sheets. Well, we didn't design it to FM global. That's an entirely separate standard than what NFPA 13 has.  

Considering the original bid documents never mentioned FM global and we had no idea on the contracting side that it was an FM global job, well obviously, it was a big surprise to us. 

It also made things very difficult for the project. We first had to evaluate the differences between NFPA 13 and FM global throughout our entire project. We had to redesign portions of the system just to estimate the cost impact to the contractor. We then had to get approval. Now I'm a third party consultant that's designing the system and doing the shop drawings, but I had to do a lot of work just to get that information over to my client, the subcontractor, in order for them to price it. We had to get approval for each of these different cost impacts to the owner so that the owner could decide whether they were going to comply with their own insurer requirements. And whether that was every single comment, some of the comments or none of them. If they met the insurer recommendations, then all is good, but they have a big cost. Or if they don't meet the insurer recommendations, doing so would potentially risk not getting coverage altogether or at a minimum increased insurance premiums. 

After the building owner got pricing from the sprinkler contractor, we had to meet and discuss every individual change, discuss the impacts to the schedule, the cost impact and impacts to other systems in the building, and then get input from the original consultant on the job who weighed in with their own opinion. 

After that long and painful exercise to figure out all of the individual differences between NFPA 13 and FM global, and then to price out every individual difference, we finally got approval on some of the recommendations to incorporate and others to move on in only comply with NFPA 13. 

So I elaborate on that long story because it was a long and painful process that could have simply been avoided altogether.  

When a consultant is involved on a job, they need to ask the question and verify whether or not insurance requirements affect the design of the system. Figuring that out after bid is just too costly and it hurts the project too much. It's also honestly a very easy thing to coordinate up front. 

Unfortunately, I've also seen this as a simple line item in consultant specifications that tells the contractor that they need to coordinate whether insurance requirements apply to the job. Well, this could be a huge cost change. Some specs would even say that you have to coordinate this before you bid the job. If the contractor has to ask the building owner, whether insurance requirements apply prior to bidding, which is required by the specifications, then why can't the consultant just ask that upfront and put it in the specs. The consultant's job is to clarify these big cost items up front anyways. 

If any of these insurer changes would have resulted in adding a fire pump to the job, then the cost impact would have grown just exponentially. 

So, all that being said, we know it's an important thing to coordinate, but how do you go about asking? 

Usually in my list of coordination items with the architect, this is a quick and easy question: Are there any insurer requirements that the fire protection design needs to incorporate, such as FM global? The architect likely won't know this answer offhand, but the building owner should be familiar enough with their own insurer and usually is able to answer this question very quickly. 

I'm Joe Meyer, this is MeyerFire University.