Insurance companies, protection strategy

One approach in beginning the development of a fire protection strategy is to define the level of risk that the company is able or willing to accept. Acceptable loss is defined as the cost of a loss event (repair/replacement, including demolition and debris removal, plus consequential business loss) that is within the capability of the company, business unit, or division to absorb financially and culturally. This loss can be retained within the company or partially transferred to others through insurance. 

It is important that a company maintains a consistent philosophy for estimating potential fire loss in their facilities to establish fire protection strategies. There are different approaches for estimating fire loss, but most are a combination of insurance and industry approaches. 

While complex in detail, a basic understanding of insurance coverage is necessary in determining a company s fire protection strategy. The insurer is, in effect, wagering that a company will not have a loss or that it will be smaller than the maximum estimated. The company, on the other hand, buys insurance (peace-of-mind) to protect investments in the event something happens. 

Additionally, changes in insurance companies (hence changes in protection desired) or a change in ownership that requires different levels of protection can impact the facility s fire protection strategy. 

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