Staffordshire Parcel Centre Fire: Insurance Considerations for Shared Warehousing

Property of Sky News: A View taken from a drone of the fire. Pic: PA https://news.sky.com/story/staffordshire-businesses-ordered-to-evacuate-as-10-fire-engines-tackle-cannock-parcel-centre-fire-13132081

A fire erupted at a Staffordshire distribution fulfilment warehouse on the 9th of May, prompting businesses to evacuate and 10 fire engines to rush to the scene. Witnesses reported that plumes of black smoke billowing from the centre were visible from as far as 10 miles away. Fortunately, no casualties were reported, but the fire caused extensive damage to both the building and its contents. 

The parcel centre, located in Cannock, has been open since September 2019 and serves as a distribution warehouse for various companies, including Amazon and eBay. From our experience conducting numerous surveys of similar buildings, risk arises when other customers’ stock, located in the same premises, is deemed to be of a higher risk, directly impacting your own stock. 

While the cause of the fire is still unknown at the time of writing, our first question upon learning about the disaster was whether the building was equipped with sprinklers. We can’t clearly see any sprinkler tanks located on the site, but it’s common for a building of this size to have some sort of sprinkler system. Could this have been a major safety oversight that contributed to the outbreak and spread of the fire? 

Regardless of the cause, this incident highlights the importance of robust fire prevention measures and comprehensive insurance coverage to protect businesses from unexpected emergencies like this. 

There are various insurance cover considerations, including: 

Business Interruption. 

The fire was widespread, meaning neighbouring businesses would have been forced to close or have been denied access due to the fumes. These businesses may suffer a financial loss themselves unless they have comprehensive business interruption coverage built into their business insurance. 

Stock Insurance

Were the companies storing goods at the warehousing insuring their own stock, or were they relying on the warehouse providers’ insurance? We always recommend that customers insure their own stock, even if it’s stored at a fulfilment centre. This can help mitigate potential losses in case of a fire or any other incident, providing you with peace of mind that your inventory is financially protected. 

Loss of Turnover and Gross Profit

With stock lost in the fire, affected businesses face potential losses in terms of turnover and gross profit. Certain business interruption policies, such as those with a ‘storage extension’, provide some cover for the loss of gross profit following such scenarios. It’s crucial to really drill down to the details of your insurance policy to ensure you’ve considered every eventuality and to give your business the best chance of bouncing back, even after an incident as dramatic as the Staffordshire parcel centre fire. 

These are just a few key points to consider. As always, we strongly advise businesses to thoroughly review their insurance policies to ensure they fully understand their coverage. For more detailed information or assistance, please don’t hesitate to contact us at 01274 515747 or email mail@lwood.co.uk.