Why Invest in a Commercial Fire Alarm System?

Posted on by Greg Palya


Security manager decides on using a commercial fire alarm system

That’s the first question I asked myself when I started working in fire protection. Why would someone invest in something that has nothing to do with profit margin and ROI?

Well now that I’m 90 days into my fire protection career, I’ve developed three reasons why companies invest in fire alarms.

Let’s jump right in…

1) Commercial Fire Alarm Systems Save Companies Money on Insurance Premiums

Companies have to pay for insurance on the buildings that they own/rent. Insurance companies look at the potential risk (amount of employees, what are they producing, what machines are being used, what is the amount of value we are insuring, etc.) and determine a cost.

To reduce that risk, a company can pay for a fire alarm system. When the risk of damage is reduced, so are the insurance premiums.

But, by how much?

I talked with Sedmack Insurance and Financial Services in North Olmsted, Ohio, and they claimed a 10-15% savings on commercial property insurance with a fire alarm system that reports to authorities.

To get some assurance, I also talked with Brian Almond at Farmer’s Insurance here in Cleveland, Ohio and he claimed up to 15% savings on commercial property insurance as well.

Certainly there is math involved with determining savings (cost of alarm system, inspections and maintenance vs savings on insurance), but there are other incentives as well…such as:

2) Commercial Fire Alarm Systems Provide a Safer Environment for Employees

When people apply for a job, do they really care if a fire alarm is present? Probably not, unless you’re about to work in a hazardous work environment.

But maybe your company is warm-hearted and employs disabled workers? If so, they will definitely feel safe knowing there’s a fire alarm (with sound and lighting) that can alert them if there’s a fire.

There’s a direct correlation between safe employees and productive employees, Per OSHA: “Injuries and illnesses increase workers’ compensation and retraining costs, absenteeism, and faulty product.

They also decrease productivity, morale, and profits. Businesses operate more efficiently when they implement effective safety and health management systems.

A Fortune Five company increased productivity by 13 percent, while a small, 50-person plant decreased faulty product and saved more than $265,000 with a strong safety and health program.”

3) Commercial Fire Alarm Systems Stop Business Interruption

Did you know that 70% of businesses involved in a major fire either do not reopen or subsequently fail within 3 years of fire?

The reason why…business interruption!

Businesses needs to operate on a schedule, and once schedules are messed up, nothing but unfortunate events happen.

People can’t go to work, orders aren’t filled, appointments are cancelled, equipment is damaged, etc.

The only businesses who survive a major catastrophe are the ones who are prepared to avoid it.


Today, you’ve hopefully learned of a few reasons why companies use fire alarms. If I could give any advice to any commercial building that doesn’t have an alarm system, break out the pen and pad, and start crunching some numbers and answering these questions.

  • What happens to this company if this building goes down today?
  • How much would a fire alarm cost to install, maintain and inspect?
  • How much are we currently paying for commercial property insurance?
  • How much could we save per month on commercial property insurance by installing a fire alarm?

Certainly, there are plenty of reasons why companies have fire alarms.


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