"Hot work" a leading cause of industrial fires

Welding, cutting, grinding, and other "hot work" activities continue to be among the top contributors to industrial fires, especially in high-risk environments like food processing and cold storage facilities. 

According to a Lockton report, inadequate oversight of these operations is frequently linked to catastrophic losses, including full facility shutdowns and major insurance claims.

High-risk operations with high-cost outcomes

According to risk experts, insurers view hot work as both a frequent and severe exposure. Common factors include combustible construction materials such as expanded polystyrene (EPS), accumulated residues like grease or dust, and delayed fire detection in refrigerated or confined areas.

Claims tied to hot work incidents often involve total structural loss, business interruption, product spoilage, and third-party liability if neighboring businesses are affected.

Risk management: What insurers expect

To mitigate these risks, insurers expect facilities to implement structured hot work controls, including:

• Hot Work Permit Programs: All non-routine hot work should require a formal, documented permit issued by trained personnel. Permits must specify scope, duration, fire watch instructions, and be subject to regular audit.

• Contractor Oversight: Subcontractors performing hot work must follow the facility’s permit system – not their own. Insurers also expect to see licensing, proof of training, liability clauses, and current insurance certificates on file.

Fire prevention and monitoring tactics

Recommended physical and operational safeguards include:

• Clearing flammable materials within a 10- to 15-metre radius of the work zone
• Using fire-resistant blankets and barriers
• Installing flame or smoke detectors, particularly around EPS panels
• Employing thermal imaging to detect post-work smouldering
• Maintaining a fire watch during and for at least 60 minutes after work concludes
• Logging inspections and fire watch activities for insurer review

Insurance impact and claim trends

Firms that demonstrate robust hot work controls may benefit from lower premiums or broader market access, as insurers increasingly factor risk management into underwriting decisions. On the flip side, claims stemming from uncontrolled hot work often face scrutiny.

“Failure to follow internal procedures” is a common reason cited by adjusters for claim denials or coverage reductions.

Industry guidance

Lockton advises insureds to:

• Align internal policies with NFPA 51B fire safety standards
• Train both employees and contractors on protocols
• Retain all relevant documentation – permits, logs, inspections – for at least three to five years
• Engage insurers during annual risk reviews to ensure controls meet expectations

A strategic approach to risk

Effective hot work management goes beyond compliance – it’s now a critical element of insurance eligibility and cost control. With insurers increasingly focused on loss prevention, companies that take a proactive approach stand a better chance of minimizing losses and maintaining favorable coverage terms.