Fire and The Unforeseen Consequences
By Randy Tipton

Many owners believe that their facility could not - and will not sustain a loss because metal doesn't burn and the concrete pad cannot be damaged.

While we wish this was true, it is not. The intense heat produced by a fire can cause metal to distort and concrete to crack, resulting in permanent structural damage. Fire is one of the most devastating losses a storage owner will ever experience. The after effects of a fire are even more tragic!

Think about the nature of our business. We allow tenants to empty out their homes, garages and businesses to store their "stuff" at our properties. We protect our facility with a well-written lease that clearly states that the tenant is not allowed to store hazardous contents in the unit. The tenant agrees to the terms of the lease, signs it making it a legal binding contract, and heads off to fill your property with flammables. Oftentimes it is unintentional. Gasoline, paint, home cleaning products are all considered hazardous materials. So, even the best tenant is putting your property at risk. Add to that the fire load being placed in the same unit, mattresses, boxes filled with old papers, photo albums, the list goes on and on.
As tenants move items in and out, they sometimes break another rule at your facilities - they smoke! There have been countless fire claims that have originated from inside a closed unit. Embers igniting the contents of a single unit could cause considerable damage to your facility. The fire may go undetected for awhile until a tenant or facility manager sees smoke or flames billowing.

By the time the fire trucks arrive, the unit is in full blaze. Huge amounts of water and flame retardants will be spewing all over the engaged building and neighboring buildings to put the fire down.

Most business owners don't think about secondary damage. In addition to the physical damage from the fire, you can expect clean-up of pollutants as a result of the fire fighting. Recently, a facility had a fire that started in a unit that contained various unknown household chemicals, plastics and rubber tires. Somehow fire ignited and during the efforts to put the fire out, the run-off water carried the chemicals to the property adjacent to the facility. The adjacent property owner filed suit for property damage, including damages related to a delayed pending sale of the property.

There is also the consideration of lost income that ensues after a fire. Not only will the facility have a business income loss during the reconstruction, there is also the need to supplement income as the property rents up after construction.

There are ways to protect your business. Obviously, proper sign-in procedures and a well written lease agreement are vital. However, your most valuable tool in protecting your facility and your assets is insurance.

Fire is a covered cause of loss on almost every insurance policy. Business Income Coverage is often available on an "actual loss sustained" basis, but is only triggered by a covered loss.
Be aware that most policies only cover a limited amount of pollution clean-up after a covered cause of loss. So, in the example above, there would be a "sub-limit" available for the clean-up of pollutants at the facility. This limited amount would not have provided coverage for the property damage to the adjacent property or the legal defense of the suit brought against the facility.

Fortunately, the facility had a pollution liability policy that provided third party liability, legal defense, and pollutant clean-up removal. It also provided a limited amount of business income coverage. The claim resulted in a payment of just over $415,000, most of which would not be covered without this highly specialized pollution liability coverage. Imagine the financial impact of such a large uninsured loss! It would be devastating to most businesses!

NOTE - The insurance company’s liability for coverage in the scenarios described herein is subject to the terms, definitions, conditions, exclusions and limits of liability of the policy. These examples in no way obligate the insurance company, Universal Insurance Facilities, Ltd. nor any party to the program to respond to claims for coverage not granted by the policy.