Does apartment insurance cover fire department service charges?
Most commercial property policies include a small automatic limit for fire department service charges, but it may be inadequate for large apartment fires requiring extended response.
When a fire department responds to an apartment building fire, many municipalities bill the property owner for the cost of the response. These charges can range from a few hundred dollars for a minor incident to tens of thousands of dollars for a multi-alarm fire requiring hazmat response, aerial ladder trucks, and extended operations. Some jurisdictions assess charges based on hourly rates for personnel and equipment, while others impose flat fees per response.
The ISO Commercial Property Coverage Form (CP 00 10, Section A.4) includes fire department service charges as an additional coverage, automatically providing up to $1,000 per occurrence at no additional premium. This limit has not been updated in decades and is grossly inadequate for most apartment fire responses. A single engine company response might cost $1,500 to $3,000, and a multi-alarm apartment fire with multiple companies responding for several hours can generate charges of $15,000 to $50,000 or more.
Apartment owners should request an endorsement increasing the fire department service charge limit to at least $25,000, which is typically available for a nominal premium increase. Some package policies designed for habitational risks include higher automatic limits of $5,000 to $10,000.
It is important to distinguish fire department service charges from fire suppression costs covered under other policy provisions. If the fire department causes water damage while extinguishing a fire, that water damage is covered under the property policy's fire coverage as a resulting loss—it is not subject to the fire department service charge limit. The service charge provision specifically covers the billed cost of the fire department's response, not the collateral damage from firefighting operations.
Not all jurisdictions impose fire department service charges on property owners. Some states prohibit or limit such charges for properties within the taxing district that funds the fire department, reasoning that property taxes already cover fire protection services. However, properties served by fire districts outside their taxing jurisdiction are commonly subject to response charges.
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