Hot Works: A rising concern for fire risks

A high profile risk in property fire insurance

Historically in property fire insurance, there has been a constant focus on arson, smoking, processes, hot work, electrical fires etc. However, over the past few years, hot work losses have become an increasingly high profile topic for Zurich risk engineers. Zurich has seen incidents in municipal, retail and industrial settings, with significant losses. Zurich’s claims data reveals that 15% of all fires in commercial and industrial properties are caused by hot works. To help raise awareness and educate our customers Zurich has been running bespoke hot works training workshops for its customers over the past few years both virtually and on site across the globe. 

Zurich has developed bespoke hot work training materials for customers that meet their specific needs to help message the importance of managing hot work risks and dealing confidently with contractors.

To further help customers reduce risks from hot works and simplify permits, we also worked with customers and contractors to create an award winning Zurich Smart Permit as explained below.

Hot works disguised as cold works

One possible factor that complicates matters is occasional ambiguity over what qualifies as hot works. Hot works describes any process that involves the use of open flames or the local application of heat and friction. Presently, we’re seeing contractors describing the work they’re doing as cold work or cold cutting, which implies they’re not doing hot works. However, this doesn’t mean the work isn’t a fire risk. For example, cold cutting saws can still create sparks. Therefore, if in doubt, treat the work as hot work. Be particularly cautious about contractors stating their work only involves cold work or cutting and careful vetting before work commences is essential.

Hot works insurance considerations

The way a hot works project is managed could have important insurance implications in the event of a loss. In many projects involving hot works, it is common for contracts to stipulate that insurance is taken out jointly in the name of the employer and the contractor.

• Joint-name policies can help to reduce costs and administration, but they also have important implications for how potential negligence claims are handled.
• On contracts that include joint names, organisations should seek legal advice to understand the implications concerning rights of recovery and insurance arrangements.
• If contractors are arranging insurance independently, organisations should seek to establish whether there are any conditions that must be met in order for that policy to respond.

“If we are insuring on a joint-names basis, we may be precluded from pursuing a claim against the contractor for damage to property if the loss occurs as a result of their negligence.” Stewart  Powell, Major Loss Team, Property, Zurich.

Fire watchers save the day

It’s critical for any hot works that contractors or employees undertake a fire watch for 60 minutes after the work stops including during comfort breaks. Or 120 minutes if the work is on a roof. If it’s safe to do so, we also recommend the fire watcher takes photos every 15 minutes, to help prove it was undertaken and if a loss occurs its potential evidence that the correct procedures were followed. Similarly, it is also recommended to consider using a thermal camera during a fire watch to help assess whether the temperature of the work area is falling or rising. This can be a valuable early warning system. Positively, we’ve had incidents in the past year where fire watchers have spotted a fire and dealt with matters appropriately. 

Why is a Hot Work Permit system essential?

As we’ve seen, there are risks throughout the hot work process. Developing and adhering to a hot works permit system is the best way to minimise those risks. It’s essential for the following reasons:

• It’s required in most property insurance policies.
• It helps organisations meet legal and regulatory requirements.
• It ensures organisations and contractors understand exactly what the work will involve.
• It ensures that organisations/contractors consider possible alternatives to hot works.
• It ensures that organisations/contractors are aware of the full range of risks, e.g. presence of flammable materials in surrounding buildings.
• It ensures essential safety procedures are observed – e.g. provision of firefighting equipment and named fire watchers. 

Why organisations need help with permits

Zurich’s Major Loss Team have handled a number of claims relating to hot works fires at schools, with losses of between £5.75m and £18.5m. At least three scenarios involved a failure to adhere to a hot work permit. In one, there was no permit in place at all, while in the other two, the permit was being managed by the contractor without proper oversight.

Zurich Smart Permit simplifies permit management

Zurich Smart Permit is a web-based solution for managing permits associated with construction and maintenance work. It removes the need for paper permits and provides a reliable audit trail.

• Fast digital communication between contractors and site manager.
• Online dashboard stores all permit information, enabling permits to be viewed, approved or denied from one place.
• Real-time view of all work taking place, including photos.

Smart Permit is currently free to customers with properties insured by Zurich. Click here to find out more and register.

For more information on reducing risk for hot works, refer to our Hot Works Factsheet.