The Effect of Non-Compliance with Fire and Safety Standards on Building Insurance
In Australia, buildings are designed and constructed in compliance with the National Construction Code (NCC), which comprises of the Building Code of Australia (BCA) and the Plumbing Code of Australia (PCA). In relation to fire and safety standards, all the properties need to comply with the fire and safety requirements of the NCC.
The safety measures for the Fire and Safety Standards of the property need to be tested and verified regularly. For instance, in NSW, Fire and Safety Standards for property testing and verification needs to be done annually, as per the Environmental Planning and Assessment Regulation 2000 (part 9). Non-compliance with fire and safety requirements or lack of fire safety system maintenance can result in serious consequences when it comes to building insurance.
When determining insurance premiums for a building, the underwriter will conduct a risk assessment for the building in question. The risk assessment is conducted by insurance risk engineers who usually take a more conservative approach. Should any non-compliances or safety issues be identified that could lead to loss of property, the insurance premium and excess can be expected to increase immediately.
Moreover, should a property be assigned a high-risk level, this can result in insurers declining insurance renewals, meaning that a building may not be able to obtain insurance cover at all.
After a fire event, should it become obvious that the building was subject to fire safety defects or non-compliances, the insurer may limit or cancel the claim settlement.
Thus it is essential to ensure the building complies with fire and safety standards as this will not only ensure the maximum safety of occupants within the building but will likely lead to an easier process of full compensation in the event of a fire.