Hot works, such as welding, grinding, cutting, or soldering, pose significant fire risks—particularly in complex environments like processing plants.
From an insurance standpoint, these activities represent one of the leading causes of industrial fires and associated high-value losses.
Effective control of hot works is critical not only for worker safety but also for risk mitigation, maintaining insurability, and controlling premium costs.
1. Why hot works are a high insurance risk
Insurers view hot works as high-frequency, high-severity exposures due to:
Combustible construction materials (e.g., expanded polystyrene [EPS] panels).
Fat, grease, and dust residues, which accelerate fire spread.
Cold storage environments, which delay fire detection and suppression.
Poor access for fire crews in confined plant layouts.
Claims resulting from hot work incidents can involve:
Total building loss.
Business interruption due to plant downtime.
Product spoilage from refrigeration failure and smoke damage.
Liability exposures if third parties are impacted.
2. Key risk management strategies
From an insurance perspective, the following controls are essential to minimize exposure and enhance risk acceptance:
a. Mandatory hot work permit program
A documented permit system for all non-routine hot works.
Permits to be issued by a trained responsible manager.
Scope, location, duration, and fire watch instructions clearly recorded.
Permits should be audited periodically as part of your internal controls.
b. Contractor Controls
Subcontracted hot works are a frequent source of claims, and so insurers expectation is that:
contractors are licenced, insured, and trained in hot work safety.
contractors adhere to the facility’s permit system (not their own).
Whether hold harmless and indemnity clauses are in place to shift liability.
Certificates of Insurance should always be requested and retained.
3. Fire risk mitigation measures
Some practical measures to take:
a. Physical controls
Remove combustible materials within a 10–15 meter radius of the hot work.
Use non-combustible blankets, welding screens, and shields.
Install smoke or flame detection systems, particularly in EPS panel areas.
Consider thermal imaging scans post-hot work as an additional control.
b. Fire watch and monitoring
Maintain a trained fire watch during hot works and for at least 60 minutes afterwards.
Keep class-appropriate extinguishers within immediate reach.
Use infrared thermometers or thermal cameras to detect smouldering.
c. Pre- and post-work inspections
Conduct site inspections before and after work to verify readiness and safety.
Log and retain inspections and fire watch documentation for insurer audits.
4. Insurance implications
Demonstration of effective hot works can lead to:
Premium concessions
Increased capacity via enhanced underwriter appeal and broader market access
5. Claims lessons and real-world examples
Many insurance claims involving hot works stem from:
Work performed on or near EPS-insulated panels without isolation.
Improper or absent fire watch
Hot works during production hours or near active refrigeration systems.
No permit system or lack of permit enforcement.
Insurance adjusters often cite "failure to follow internal controls" as a major factor in denying or limiting claims.
6. Recommendations for insureds
Develop a formal Hot Work Policy aligned with NFPA 51B and insurer guidelines.
Train employees and contractors on permit procedures and fire watch responsibilities.
Retain all documentation (permits, inspections, fire watch logs) for at least 3–5 years.
Work with your broker and insurer to review hot work protocols during annual risk surveys.
Conclusion
Managing hot works in processing plants requires more than operational oversight; it demands strategic risk control that aligns with insurance expectations.
By implementing a robust hot work permit system, maintaining strict contractor controls, and proactively engaging with your broker, you can reduce the likelihood of a catastrophic loss and improve your organisation’s risk profile and insurability.
Contents of this publication are provided for general information only. It is not intended to be interpreted as advice on which you should rely and may not necessarily be suitable for you. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. Lockton arranges the insurance and is not the insurer. Any insurance cover is subject to the terms, conditions and exclusions of the policy. For full details refer to the specific policy wordings and/or Product Disclosure Statements available from Lockton on request.
