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The use of expanded polystyrene (EPS) for insulation and temperature control is a necessary fact of life for many businesses. It also represents a major issue for insurers as EPS constitutes a fire risk that demands effective management.
EPS has been associated with multi-million dollar claims, with the result that many insurers are reluctant to provide property insurance where EPS is present.
If you have EPS panels on your property you must have strong safety and risk controls to get optimal insurance outcomes. For example, demonstrating sound risk management protocols, ensuring hot work permits are current and following risk recommendations from insurers in respect to processes such as welding will help you get the best coverage and premium for your business.
Insurers that are prepared to provide cover are subjecting EPS risks to stringent underwriting criteria in terms of management, prevention, mitigation and containment measures.
An EPS assessment is critical to support insurance submissions. Making an EPS assessment involves 3 key steps:
The largest area of concern for insurers is the protection of the EPS insulation and how businesses are mitigating potential fire loss in relation to any type of 'hot work'.
Insurers will require detail about the protection of EPS insulation and fire risk mitigation relating to cooking, heating, welding, battery charging, gas extraction and electrical cabling.
Business owners need to be prepared to provide proof of:
It is strongly advisable that if possible, old or damaged EPS panelling be replaced with fire retardant alternatives. In deciding the correct panel to use, consider the area and size of the building, as well as whether retrofitting sprinkler systems is the best way to mitigate potential damage.
Documenting these measures and the capital expenditure undertaken demonstrates that a proactive approach to limiting and containing EPS risks is in place, which may help influence premium pricing from your insurer.
Having thorough and far reaching fire safety management procedures in place can significantly mitigate the risk of loss due to having combustible EPS panels in your buildings. Precautions around these older EPS panels is critically important to how the fire hazard in its totality is assessed.
Implementing the following high standard fire protection practices into your engineering, maintenance or operations teams' day to day activities reduces the opportunity for a fire event to occur.
Taking these actions helps provide your insurer with the assurance that you are being proactive about risk management in your business, making your enterprise a more attractive insurance prospect and improving your chances of securing more favourable terms on your cover.
Commercial property risks and insurances can be one of the most crucial areas of focus for a business. As a high value asset and high cost risk, expertise and support from a broker is of critical value.
Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general information purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient's industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers' control.
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