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OCTOBER 2013 issue of
Rental Management

Risky Business: Cause and origin

The mechanic was the last person in the building. He had one more piece of equipment to get ready for a rental first thing in the morning and he decided to stay late rather than arrive early in the morning. When the lift had been inspected and was deemed ready to rent, the mechanic completed his regular routine, cleaned up behind himself and looked around the shop for anything out of place.

Last on the list was checking the doors to be certain the store was locked up tight before he left for the day. Everything appeared to be fine, so he locked up the building and went home.

Several hours later at 2 a.m., the fire department was alerted of a fire at the rental store by the alarm system. When the fire department arrived at the scene, they set off the burglar alarm entering the store. The store owner was notified by a phone call from the alarm company a few minutes later that two alarms were going off at his store — fire and burglar. He hurried to his store to see exactly what was going on, fearing the worst.

The back half of the rental store was engulfed in flames. Most of the equipment that was not out on rent was located in that part of the store. Many of the items were completely melted and/or burned up and were considered total losses. The rest were questionable, at best.

At the time of the fire, the rental store owner was in the process of moving to a new location and they intended to keep the fire damaged location as their equipment service shop. Most of the office equipment and files had already been moved. The rental store was able to relocate its business rather quickly to the new location, however, most of the equipment rental inventory had been lost in the fire and they did not have much to offer for rent.

A claim was turned in to its insurance company and the adjuster worked quickly to assist the rental store owner. An advance on the claim was provided, so the owner could begin the process of replacing his equipment.

Next up was determining the cause of the blaze. When the fire department arrived on the scene, the fire appeared to have started in the southeast corner of the store, but they weren’t able to determine how. A cause and origin expert was hired to get a more definitive answer. He believed a faulty electrical wire from a nearby refrigerator or microwave may have ignited soiled rags.

The microwave and refrigerator used by the rental store employees were both very old. An analysis of that equipment was not feasible due to their ages and their condition after the fire.

There also was the possibility that the fire was a result of spontaneous combustion. Fires caused by spontaneous combustion commonly occur when old rags soaked in a flammable liquid — such as oil, paint or wood stain — are not disposed of properly. If these rags are thrown aside and forgotten, oxygen from the air may slowly unite with the flammable substance in the soaked rags. At first, there will be no fire, but as oxidation gradually takes place, heat accumulates to set the rags on fire. Even if the rags are disposed of in a metal container, the lid must be in place to prevent oxygen from the air mixing with the flammable substance.

The employees at the rental store were very careful to always put their oily rags in the metal container provided by the owner. Every evening it was one employee’s assigned duty to verify the lid was on the metal container before he left the building. The mechanic thought he remembered checking the container before he left for the night, but couldn’t be certain.

Because of this, the cause and origin expert ruled how the fire started as “undetermined.”

The rental store owner had excellent records and was able to provide a current inventory list. The company also had accurate records of all the items that were out on rent at the time of the fire. Because of this, the store’s “downtime” after the fire was greatly reduced.

The destroyed section of the building was demolished. The rental store opted to rebuild and continue with the plan to use that location as an equipment service shop. Eventually their equipment was replaced and several months later they were back running at full strength.

Their insurance paid nearly $500,000 to settle the claim in its entirety.

Mary Ann Gormly, CERP, is a loss analyst for ARA Insurance, Kansas City, Mo. For more information, call 800-821-6580 or visit ARAinsure.com.




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