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What Does A Colorado Construction Company Need To Know About A Catastrophic Risk Of Loss?

Over the years, I have had Colorado general contractor clients ask me what their biggest liability risks are for buildings they build or own. I imagine insurance carriers for those business construction company clients have asked themselves the same thing.
What I have told my clients is that there are many ways to measure a risk or loss. However, if a catastrophe is a loss that can result in total destruction in a matter of minutes, it seems as if the biggest risk would be due to fire, absent a missile strike. It is important to note that I am referring to acts of men, i.e. negligence, not acts of God, i.e. earthquakes and tsunamis.
The National Fire Protection Association (NFPA) provides an overall fire picture for each year. In 2007:
* There were an estimated 1.6 million fires.
* 3,430 civilians were killed and 17,675 civilians were injured
as the result of fire.
* Fires killed more Americans than all natural disasters
combined.
* 84% of all civilian fire deaths occurred in residences.
* An estimated 32,500 intentionally set structure fires resulted in
295 civilian deaths and $733 million in property damage.
Particularly risky are fires occurring in a building where the public is invited. Some of these buildings are office buildings, but others are nightclubs and theaters. In additional to often total destruction of the building in a fire, litigation arising out of fire injuries or deaths can expose general contractors, subcontractors, and vendors to liability in the hundreds of millions of dollars.
The ten deadliest public assembly nightclub fires in U.S. history are:
* Richmond Theater, Richmond, VA, December 26, 1811 – 72 deaths – caused by a kerosene chandelier igniting stage scenery
* Conway’s Theater, Brooklyn, NY, December 5, 1876 – 285 deaths – caused by a kerosene lamp igniting a stage curtain
* Iroquois Theater, Chicago, IL, December 30, 1903 – 602 deaths – believed to have been caused by faulty wiring leading to a spotlight
* Rhodes Opera House, Boyertown, PA, January 12, 1908 – 170 deaths – believed to have been caused when someone on stage kicked over a kerosene lamp


Rhodes Opera House, Before and After the Fire 1908
* Rhythm Club dance hall, Natchez, MS, April 23, 1940 – 207 deaths – believed to have been caused when a careless smoker ignited decorative Spanish moss hanging from the ceiling
* Cocoanut Grove nightclub, Boston, MA, November 28, 1942 – 492 deaths – cause is speculative, but after 50 years is believed to have been caused by the ignition of gas from a faulty air conditioner
* Ringling Brothers and Barnum & Bailey circus tent, Hartford, CT, July 6, 1944 – 168 deaths – tent coated with waterproofing consisting of paraffin and gasoline was ignited by an unknown source


* Beverly Hills Supper Club, Southgate, KY, May 28, 1977 – 165 deaths probably caused by faulty aluminum electrical wiring
* Happy Land Social Club, Bronx, NY, March 25, 1990 – 87 deaths – caused by an arsonist using gasoline
* The Station nightclub, W. Warwick, RI, February 20, 2003 – 100 deaths – caused by rock band’s pyrotechnics igniting flammable foam soundproofing lining the walls


After one of these fire disasters, someone is going to be left holding the bag. You can bet your bottom dollar that if the fire insurance company and the building owner are sued, they will be looking around for contribution from others. In a later blog, I will address all of the potential stakeholders for a fire catastrophe. I will also look at the reasons why other stakeholders might be liable for full or partial contribution. My advice to them? Buckle up and make sure you have plenty of your own fire insurance coverage – the ride is going to get bumpy.
As a Colorado general contractor or business construction company who may be at risk should a catastrophic fire event take place, it is important to contact a Colorado Business Litigation attorney who is knowledgeable in this area. I would enjoy the opportunity to speak with you and discuss how I may be able to assist you, and your company.
~Jim Gilbert~

Sources:
National Fire Protection Association,” Fire Loss in the U.S. 2007 and USFA’s Firefighter Fatalities in the United States in 2007.”nfpa.org