Plastic Tote Storage – Property & Insurability Risks

What does your warehouse and commodity storage look like? Wooden Pallets? Plastic totes? Plastic totes containing flammable liquids (e.g. food grade oils)? 

Businesses in the manufacturing & distribution industry are reporting that plastic totes – often referred to as plastic IBCs (intermediate bulk containers) – are taking the place of traditional transfer containers such as cardboard gay-lords or wooden pallets for goods, parts, ingredients, etc. Often, this unknowingly creates potential fire hazards on the business’s property and, in turn, affects the insurable risk of the business.

Previously under a “soft” insurance market (when premiums hold steady or decrease) these issues might or could have been overlooked. However, as we cycle into a “hard” market (when rates increase and coverage is harder to find) businesses should be addressing these issues proactively to ensure the most favorable coverage terms and stability.

The highest priority concerns revolve around the capability of sprinkler systems to manage fires that involve highly flammable/combustible liquids. The risk of a pool fire or potential leakage of such containers and the resulting hazard potential are also major concerns. Even when the contents of the IBCs are not inherently volatile, the storage arrangements of the totes (e.g. racking systems, quantities, heights, etc.) could cause additional fire hazards.

What can you do to protect your people, your business, and your ability to be insured? 

Take proactive measures to reduce your risk, including:

  • Don’t use “unapproved” plastic IBCs containing flammable/combustible liquids
  • Utilize metal IBCs as alternatives to plastic
  • Maintain limited quantities of plastic IBCs to minimize the fire load. In some instances this means as few as 10 plastic IBCs in a stand-alone facility
  • Store IBCs in FM Approved flammable storage vaults (preferably outside of the building) or in lower value properties or locations that are separated by fire barriers (e.g. fire walls); pair this measure with adequate spill containment in the storage area
  • Use spill containment dispensing platforms throughout production areas

Contact your M3 Account Executive or Risk Manager to learn more.

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This article was written by Paul Klein CSP, CIH, Senior Risk Mananger at M3 Insurance.

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