Homeowners Insurance - Improving Residential Fire Safety

The National Fire Protection Association (NFPA), a nonprofit group that studies fire safety, has mixed news about fires in the United States. In a study published in September 2007, the NFPA reports that the total number of fires in 2006 increased 2.5 percent from the year before. Fortunately, however, the number of civilian deaths from fire was down a whopping 11.7 percent. The progress in residential fire safety is impressive, but more can be done to save lives.

In 2006, fire departments throughout the United States responded to 1,642,500 fires. Of those, 32 percent (524,000) were structure fires. The other 68 percent were outdoor fires (51 percent) and vehicle fires (17 percent). Of the structure fires, fully 79 percent involved residences.

The cost of these fires in lives and property is staggering. Some 3,245 civilians lost their lives in fires. 2,580, or nearly 80 percent, of those deaths occurred in apartments and homes. The good news is that those are the lowest totals since the NFPA started its survey in 1977. Residential fire fatalities decreased 14.2 percent. Since 1978, residential deaths from fire have decreased an amazing 57 percent.

The number of fire injuries to civilians also declined significantly from 2005 to 2006. 16,400 fire injuries were reported in 2006, an 8.5 percent decrease from the year before. 12,925, or 78.8 percent, of those injuries were caused by residential fires.

Fires caused $11.3 billion in direct property losses in 2006-more than caused by hurricanes ($5.4 billion) and floods ($5.2 billion) combined. Nearly $7 billion, or 62 percent, of those losses occurred in residential properties. The U.S. Fire Administration believes that direct costs may be the tip of the iceberg. The agency estimates that indirect costs, such as lodging for those evacuated from their homes, lost wages, lost business, and medical expenses could be ten times higher than the direct costs. Fire risk is the reason why homeowners insurance was originally developed, and it remains the main reason homeowners carry it today.

The first fire insurance company was started by the English physician and entrepreneur Nicholas Barbon in 1667, in the aftermath of the Great London Fire of 1666. As the business grew, so did Barbon's interest in minimizing his company's risk. In 1680, he founded London's first fire brigade.

One of the Founders of the United States, Benjamin Franklin, also founded one of North America's first fire insurance companies, the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. Started in 1752, Franklin's company offered perpetual insurance, a form of single-premium insurance that protects the insured from fire loss in perpetuity. If the policy is cancelled, the insurer returns the entire premium to the customer. To make the model work, of course, the insurer must earn enough of a return on the deposit to cover losses, operations, and profits. A few insurance companies still offer perpetual insurance today, including Baltimore Equitable, The Contributionship Companies, Mutual Assurance Society of VA, and Saucon Mutual Insurance.

Franklin, like Barbon, pursued ways to minimize fire losses. His company promoted fire prevention strategies while following strict underwriting policies, such as refusing to insure homes made of wood. A prolific inventor, Franklin developed several devices designed to prevent fires, including an iron furnace stove (the Franklin stove) and the lightning rod.

Technology continues to save lives today. Residential smoke detectors, introduced in 1967, have saved thousands of lives. Fire-resistant fabrics reduced accidental ignitions of mattresses, furniture, carpeting, and window coverings. In 1993, the U.S. Consumer Product Safety Commission required disposable and novelty cigarette lighters to have a child-resistant mechanism that would make the lighters difficult for children under the age of five to operate, preventing more fires. The 9-1-1 emergency telephone system, introduced in Alabama in February 1968 but not officially adopted as the nationwide emergency number until 1999, has increased fire department responsiveness and cut down on fire losses.

More can be done, according to NFPA. The organization offers a list of five fire-prevention priorities:

1) Increased fire safety education, focusing on the causes of residential fires

2) Increased use of smoke detectors in the home

3) Increased adoption of sprinkler systems in residences

4) Increased requirements for fire-resistant in-home products

5) Increased attention to the safety needs of those most at risk to fire danger: the young, the elderly, and the economically disadvantaged

The wildfires of 2007 that destroyed 254 homes in Lake Tahoe in June, more than 2000 homes statewide in October, and another 51 in Malibu in November, likely will make 2007 one of the worst years on record for fire-related property losses. In those conflagrations, however, the loss of life was relatively small. No deaths were reported from the Lake Tahoe Fire or Malibu Fire, and just ten people died as a direct result of the October fires that burned 500,000 acres from Santa Barbara to the Mexican Border.

Sadly, nearly that many people died in a fire that consumed a single home on the other side of the country at the same time. On October 28, a fire swept through a beach house in Ocean Isle Beach, North Carolina, killing six students from the University of South Carolina and one from Clemson University. It was a sober reminder that even with today's advanced technology, residential fires kill.