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Indiana ruling backs insurers that deny fire claims for late sprinkler notice
The court found that under a Protective Safeguards Endorsement, insurers do not need to prove they were harmed when a policyholder fails to restore protection within 48 hours and does not give notice.
An Indiana appeals court ruled that insurers can deny a fire claim when the policyholder misses a pre-loss deadline tied to maintaining working fire-safety safeguards, without having to show actual prejudice, according to Insurance Business.
The case centered on a Protective Safeguards Endorsement (PSE) covering a sprinkler system and related alarms at Garvin Street Warehouse in Evansville. A contractor discovered a frozen, broken sprinkler riser on December 23, 2022, attempted repairs that could not be completed by December 27, and work was pushed to January 2, 2023. The warehouse then caught fire and was destroyed on December 31, 2022.
The PSE required full protection to be restored within 48 hours and said insurers did not need notice of a sprinkler problem if protection was restored on time. Because Garvin could not restore the system within that window and did not provide notice when the issue was found, the insurers denied the claim.
Garvin argued insurers had to prove they were actually harmed by the lack of notice, pointing to an earlier Indiana Supreme Court decision. The appeals court disagreed, distinguishing pre-loss conditions that determine whether coverage attaches from after-the-loss notice rules, and it affirmed lower court decisions for the insurers. The ruling indicates that, in Indiana, clearly written protective safeguards provisions can defeat coverage based on their terms alone when a policyholder misses a pre-loss condition.