Business Insurance

Fire Risk: Are you taking the right steps to protect your business?

fire alarm

Fire is one of the greatest hazards an organization can face. Each year thousands of nonresidential fires occur, leaving employees injured, businesses interrupted, and billions of dollars in property damage.

The main causes of nonresidential fires include:

  • Cooking – 29.3%
  • Intentional – 10.5%
  • Unintentional or careless actions – 9.8%
  • Heating – 8%
  • Electrical malfunction – 4.9%
  • Open flame – 6.5%
  • Other causes include appliances, equipment malfunction, smoking, and playing a with heat source.

The impact of nonresidential fires in 2012 included the following:

  • Fires 100,500
  • Civilian Deaths 70
  • Civilian Injuries 1,500
  • Direct property damage $2.6 billion

The risk is significant but it can be mitigated significantly with fire safety education, fire protection, and emergency preparedness. Here are a few tips to help you protect your employees, customers, and business.

Fire Safety Education

  • Educate employees on what to do in a fire emergency, including specific evacuation procedures.
  • Train employees on fire hazards specific to your workplace.
  • Instruct employees on the use of fire extinguishers and fire protection procedures.
  • Conduct an annual fire drill and practice the building evacuation plan. If possible, sound the fire alarm during the drill so employees are familiar with how the alarm sounds as well as any other audible or visual signals that are part of the system (such as voice commands or flashing lights).

Fire Protection

  • Regularly recharge fire extinguishers.
  • Make sure the fire alarm and suppression systems are certified as required and tested annually.
  • Sprinkler systems should be checked periodically. This can be assigned to someone within your organization who has the proper training or outsourced to a sprinkler contractor.
  • Flush exterior private fire hydrants once per year and include them on a routine preventative maintenance schedule.
  • If you have fire doors and shutters, conduct regular inspections to ensure they are in good operating condition and are unobstructed.
  • Inspect evacuation routes on a daily basis to ensure they are free from obstruction.

Emergency Preparedness

  • Prepare to respond to an emergency before it happens. When you are in an emergency situation, it is more difficult to think clearly and logically.
  • Designate an emergency coordinator and team.
  • Develop a fire plan outlining assignments of key personnel and include an evacuation plan. The plan should be tailored to your worksite and the fire hazards your organization faces. Review the plan at least once per year and update as needed. Communicate the plan to all employees – this can be done as part of new employee orientation and in conjunction with your annual fire drill.
  • Employ good housekeeping inside and out –don’t allow garbage and unnecessary materials to accumulate.
  • Implement a preventative maintenance program for operational equipment (building utilities, processing equipment, material handling equipment). The maintenance plan should meet manufacturer’s specifications and industry standards.
  • Prepare a list of all vendors’ and key customers’ contact information. Keep the list up to date and store in a secure location that you can access in the event of an emergency.

Business Interruption Insurance

In April 2015 a fire destroyed a warehouse at the General Electric Appliance Park in Louisville, Kentucky. Luckily, no one was injured. Production was put on hold until warehouse space was prepared in other areas of the park. About 3,000 GE production employees were told to stay home for at least the next week. The delay in production had a significant impact on business operations.

In a situation such as this, business interruption insurance can protect your business from permanent closure. This coverage:

  • Reimburses the amount of gross earnings minus normal expenses that would have been earned if the interruption had not occurred (or the profit that would have been earned plus expenses of continuing normal operations during the period of interruption).
  • Protects against losses that arise when a business is unable to continue normal business operations and functions that result from damage caused by a covered risk.

In addition, extra expense coverage covers “reasonable and necessary extra costs” incurred that are above normal operating costs and necessary to keep the business running after damage to its property.

To learn more about this important coverage, and to make sure you have the right protection in place for your organization, please contact your Leavitt Group insurance advisor.

References:
http://www.usfa.fema.gov/data/statistics/#tab-4
http://www.nfpa.org/research/reports-and-statistics/fires-in-the-us/overall-fire-problem/non-residential-structure-fires
https://www.osha.gov/Publications/smallbusiness/small-business.html#fire
http://www.insurancejournal.com/news/southeast/2015/04/07/363458.htm
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1 Comment

  1. That’s a good tip to train employees in anti-fire strategies. That way you can have increased workplace safety. My mom used to run fire drills with me and my siblings- I bet businesses could do that as a training as well.