RCM&D Corporate Blog

$39M Campus Apartment Fire Gives Reasons to Reflect on Risk Management

Posted on: Thu, 27 Apr 2017

Earlier this week, a five alarm fire took out the top floors of a new, 275-unit apartment building in College Park, Maryland. Thankfully, the building was still unoccupied as its first residents were not slated to move in until June.  The widespread fire caused $39M in damages, evacuations of nearby residents and a shutdown of the University of Maryland's campus.  Fire officials cite the lightweight wooden trusses in the roof as being a major contributor to the fire’s intensity and rapid spread.  These materials are currently permitted by code, but groups have been actively pushing legislation to require stronger, noncombustible materials as the new industry standard. 

In the coming days and weeks many risk management and insurance coverage questions will be posed by and to the community, local government, college, property developer and various construction partners involved in the project.

Questions about the loss event itself:

  • What property and personnel controls were in place to minimize the potential for a fire hazard?
  • Was the sprinkler system operable? If so, did it function as it should have to minimize property damage?
  • Did any nearby properties also sustain smoke and/or water damage?
  • Will the college or any other nearby businesses claim business income losses?

Questions about responsibility for the loss event:

  • Were hold harmless and waiver of subrogation clauses used in the various contracts between the involved parties?  If so, with whom does the responsibility for risk control and financial responsibility ultimately lie?
  • Does the builder's risk policy provide coverage for all tiered subcontractors?
  • Is there an OCIP or CCIP surrounding this project to isolate the loss experience, streamline the claim process, mitigate the recovery time and eliminate finger pointing?

Questions surrounding reputation risk:

  • Do the parties involved have internal crisis management procedures to mitigate this type of expensive and public incident?
  • Did the developer or the general contractor communicate directly with the school or the town after the incident to mitigate an impact to their reputation or ability to secure future projects in the area?

An unexpected event like this leads to a lot of questions for property owners, developers and construction outfits. RCM&D takes a proactive approach by helping clients answer as many of these questions as possible before a catastrophe strikes.  By minimizing risk and planning for the worst, our clients are better prepared to rebound and get back to business as usual.  

Contact the authors to learn more:

Will Buttarazzi | wbuttarazzi@rcmd.com | 443.921.2516

Dave Galbraith | dgalbraith@rcmd.com | 240.482.1726

Karen Randazzo | krandazzo@rcmd.com | 410.339.5224

Bill Skene | wskene@rcmd.com | 484.581.2813