Understanding fire loss estimates and what it means for fireground operations
Estimating fire damage on the spot may affect decision-making about entering structures and depth of overhaul operations
By Chief Micheal Despain
It was 1984 when I started my fire service career. In those days, structure fires truly did burn different than they do today. In some ways, they were more forgiving, as construction was sturdier and contents burned at a much slower rate. Use of SCBAs was still optional, and fire reports were a single page form filled out with a No. 2 pencil and shipped in the mail to headquarters sometime during the next month or two.
Much of those old systems and processes are no longer in use today, as the fire service and technology have evolved.
One process that hasn’t evolved much relates to property losses. Decades ago, we were asked to estimate the property and content value before the fire, as well as the values after the fire, for the incident report. It was a common practice to estimate roughly like this: If you saved 50% of the house from fire, then there was a 50% saving in property and contents. Simple enough.
The problem: Today, even despite our technological advances, estimating property values pre- and post-fire operations is still weighted more toward guessing than actual data.
Fire loss trends drive decisions
One of the benefits of working with progressive fire agencies around the nation is we get to see the strategies used to provide much more accurate valuation estimates. Some agencies even make it a practice to routinely follow up with their local insurance agencies after each fire to document the actual costs, both pre- and post-fire, and then compare those numbers to their initial estimates. In many cases, we find the actual costs are double and sometimes triple that of the initial estimates.
Over time we have discovered a few reasons for this phenomenon, plus a few ideas for agencies to consider, both in terms of data collection and a new perspective for operational risk management.
The results of our review provided a few interesting trends, which are displayed in the chart.
The chances of survival for a trapped victim drop quickly due to products of combustion as well as thermal damage to fire. This is not necessarily new information to the fire service, but as a percentage of fire damage to the building, it does speak to a survivability profile and is, of course, the most important reason for a rapid response with a competently trained and equipped firefighting force.
As fire progresses, the damage ratio grows quickly as well. However, if we were to compare percent damaged to the cost to replace, we see that part way through the progression of fire, the cost to replace the structure might exceed 150% of the original value of the home. Then, if the fire continues to progress, the cost to replace drops back down to just slightly above the 100% mark. This is due, in part, to the fact that the insurance provider will not need to pay for the razing of the structure when the it is totally destroyed versus when it is only partially damaged.
In my discussions with fire restoration companies from California, Florida, Minnesota, Nebraska, Virginia and Washington state, we learned that once smoke and fire damage exceed 30% of the value of the structure, the building is most likely taken down to the foundation and rebuilt. The reasons: liability due to possible future mold, structural integrity, plumbing, electrical problems, and/or simply meeting the new fire and building codes for the jurisdiction. This does not mean the “30% rule” is only in effect in these select states; it just means restoration companies in these states, in particular, commented on the damage ratios in the graph as being too conservative based on their experience over just the last few years.
In terms of the individual homeowner or renters’ experience, outside of costs often exceeding their maximum insured limits, the time duration they are displaced from their home is an additional burden not often calculated in the impact of a structure fire.
In the chart, we can see the months of displacement somewhat match that of the cost to replace. If the structure has to be razed and the property remediated of possible hazardous materials (asbestos, lead, household hazardous waste, etc.), it makes sense that the customer will be displaced longer. When the home is destroyed, the clean-up time is much shorter, and construction can begin sooner. For example, in most cases, a home with 50% damage will experience an 18 to 24 month rebuild time, whereas a home completely burned experienced approximately a 12-month rebuild time.
As we think about the impact of displacement, there are many questions to consider in addition to replacement cost: Does the temporary occupancy provide the same amount of space? Are utility costs the same? Are the additional rental costs affordable? What is the impact of distance to work, school, shopping, etc.?
Please keep in mind that the data DOES NOT advocate letting structures burn to the ground when they are more than 30% damaged. What we believe it does indicate is that deployment of resources needs to account for the level of service the community expects, first balanced with the amount it is willing to pay. Then, fireground operations can assess their risks in light of this information when conducting salvage, overhaul or defensive operations.
In agencies I’ve led, we used the data to be extra cautious when putting firefighters inside structures once the life safety threat is over. Further, even salvage operations might be more limited today than perhaps years ago due to the risk to firefighters versus the real value of what was to be salvaged.
Learn your local data
If you want to explore this more, reach out to your local fire restoration company or companies, and look at the history of recent structure fires in your jurisdiction. Don’t worry about exploring any fires more than just the last two or three years since code requirements and local building costs have likely shifted considerably in that amount of time. The data may compel you to refine your fire reporting processes and perhaps your agency deployment strategies.
About the Author
Chief Micheal Despain, MA, EFO, CFO, MIFireE, is a senior consultant with Fitch & Associates. Chief Despain has over 35 years of experience in the fire service and currently serves as the interim fire chief for the City of Rocklin (California), and previously served as fire chief for the cities of Fresno and Clovis (both in California) and Lincoln (Nebraska). Despain’s professional experience includes 13 years as a peer assessor and technical advisor for the Center for Public Safety Excellence (CPSE) and 17 years as chief fire officer. Despain has authored and co-authored numerous professional publications and articles throughout his career. He regularly participates in complex assessment strategic planning projects in his role with Fitch & Associates.