Sponsored: Engle Martin & Associates

Manage Heavy Equipment Fire Risk to Reduce Costly Claims

Not investing in a good fire suppression system exposes equipment owners to numerous fire hazards, which can wipe out valuable heavy equipment.
By: | May 15, 2018 • 6 min read

Fighting something as swift and unpredictable as fire may seem like a losing battle, and indeed, fire is the second leading cause of loss for industries reliant on heavy equipment like mining, construction, marine cargo, logging and agriculture.

Heavy machinery relies on diesel fuel and/or hydraulic oil – liquids highly flammable under pressure — and in some cases process combustible material like wood chips, corn husks or other dried plant material. Together, they create a recipe for fast-moving flames.

To make matters worse, these machines tend to operate in areas not easily accessible by fire departments.

“Logging and agricultural equipment provide good examples of machinery operating in remote areas. There may not be any real roads leading to where the machine is, which impacts response time for the fire department,” said Blair Bennett, Senior Executive General Adjuster with Engle Martin & Associates, a national independent loss adjusting and claims management firm. “I’ve seen countless claims where the equipment is totally burnt to the ground by the time the fire department is able to get there.”

Tractors, excavators, boring machines and the like are expensive tools to replace. Heavy machinery typically comes equipped with hand-held extinguishers, but in most cases it’s too little too late. By the time an operator discovers there’s a problem, the small extinguisher is likely no match for a growing fire fed by the machine’s heat.

“There are specific types of fire, and each calls for a specific type of suppression,” Bennett said. The ability to distinguish classes of fire and deploy the proper solution can be the difference between a total loss and a minor repair.

Type of Fire Determines the Suppressant Needed

Blair Bennett, Senior Executive General Adjuster

The National Fire Protective Association categorizes fires as Class A, Class B or Class C, depending on what caused the combustion and what feeds the flame.

Class A fires are usually started from an accumulation of debris like insulation, upholstery or paper waste in tight areas of the equipment. If the material gets too close to a heat source, it can quickly ignite.

“This type of fire is very susceptible to heavy equipment working in the logging, agricultural and waste management industries,” Bennett said.

Class B fires involve diesel fuel, gas, grease or hydraulic oil. Hydraulic oil and diesel fuel on their own may not be very flammable, but can ignite easily under pressure and in the presence of another accelerant like gas. “These are what we call accelerator-driven fires,” Bennett said. “Hydraulic oils can operate between two and 10,000 pounds per square inch. A lot of these machines use as many metal lines as possible for high pressure hydraulic systems. Due to the nature of machines, their movements and how they work, there are still many areas of pressure that need to be considered,” he said.

Class C fires are electrical fires. Heavy equipment is heavily wired, and those wires are subject to some rough environments with vibrations, extreme temperatures and debris. Wiring can easily come loose, and just a small amount of friction against a metal component can send sparks flying.

The class of fire dictates what type of suppressant will be most effective. The two most common systems are single and dual fire suppression.

A single system uses only one type of suppression agent that may be a powder or a liquid. They tend to be cheaper to produce and install and are suitable for Class A fires without an accelerant.

A dual system utilizes tanks that suppress with both liquid and dry chemical agents, which is useful for Class B fires. The dry suppressant will extinguish the flames, while the liquid component cools down the heat source.

“If you don’t address the heat source, the fire will re-flash and return. In order to attack the fire from both angles, you need to put the fire out from the hydraulic fuel and also be able to cool down the components that can reignite, such as the heater, muffler or any moving parts that have generated frictional heat,” Bennett said.

Class C, or electrical fires, require a special type of pattern extinguisher that can illuminate the fire and spray suppression materials more strategically to avoid causing more damage or shorting.

“One thing to keep in mind is that both Class A combustion and Class C combustion can also turn into a Class B combustion if the flames travel to a hydraulic or fuel line,” Bennet said. “Therefore, a sophisticated suppression system is the best way to extinguish a fire quickly.”

Weighing the Cost and Benefits of Suppression Systems

Despite the effectiveness of fire suppression solutions, cost remains a barrier. Suppression systems generally do not come factory-installed, and operators wishing to implement such a system must have one custom-built for each particular machine.

“Each system has to be custom-designed based on the location of the heat source. It would entail detectors in various areas, multiple lengths of tubing and different locations for nozzles,” Bennett said. “I think in the future we will see more companies either having their own proprietary system or offering factory installation of the equipment.”

The systems can range from a few thousand dollars to well over $10,000 depending on how many tubes and nozzles are needed and the size of the tanks containing the fire suppressants. Vehicle owners and operators must decide whether that investment is worthwhile.

“If a company has a wheel loader valued at $50,000, it might not make sense to put $10,000 worth of improvements on it,” Bennett said. “But from an underwriting standpoint, fire suppression systems would be a way to reduce risk and lower premiums.”

Rely on Industry Expertise

Luckily, there are other simpler and less expensive ways to mitigate fire risk.

“A lot of heavy equipment fires can be eliminated with daily maintenance and cleaning. A responsible company will inspect each machine every day to ensure they are clear of combustible debris and that there are no leaking fuel lines or frayed wires,” Bennett said.

A skilled adjuster can help operators identify possible fire hazards not always obvious at first glance. A hole may not be visible, but often a gray or discolored hose indicates something is off. Belly pans that protect the engine and transmission should be kept clear — even a small buildup of waste can serve as kindling. For companies that do choose to install a fire suppression system, bi-annual inspections are necessary to keep them in top order.

“Operator education is also critical,” Bennett said. “In addition to proper inspections, operators should be trained in how to respond to a fire. Knowing what steps to take to protect yourself and the machine can minimize the damage.”

With experience in both marine and commercial property insurance, Engle Martin’s Specialty Marine & Transportation group can identify areas where an equipment owner is most exposed, either due to coverage gaps created by exclusions, or due to poor loss histories that limit their coverage options.

“We can handle anything from full adjustments involving complex claims to basic appraisals,” Bennett said.

To learn more, visit https://www.englemartin.com/loss-adjusting/inland-marine/.



This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Engle Martin & Associates. The editorial staff of Risk & Insurance had no role in its preparation.

Atlanta-based Engle Martin & Associates is a leading national independent loss adjusting and claims management provider. Privately held and owner operated, the firm delivers a comprehensive line of property and casualty claims service offerings.

Risk Focus: Workers' Comp

Do You Have Employees or Gig Workers?

The number of gig economy workers is growing in the U.S. But their classification as contractors leaves many without workers’ comp, unemployment protection or other benefits.
By: and | July 30, 2018 • 5 min read

A growing number of Americans earn their living in the gig economy without employer-provided benefits and protections such as workers’ compensation.


With the proliferation of on-demand services powered by digital platforms, questions surrounding who does and does not actually work in the gig economy continue to vex stakeholders. Courts and legislators are being asked to decide what constitutes an employee and what constitutes an independent contractor, or gig worker.

The issues are how the worker is paid and who controls the work process, said Bobby Bollinger, a North Carolina attorney specializing in workers’ compensation law with a client roster in the trucking industry.

The common law test, he said, the same one the IRS uses, considers “whose tools and whose materials are used. Whether the employer is telling the worker how to do the job on a minute-to-minute basis. Whether the worker is paid by the hour or by the job. Whether he’s free to work for someone else.”

Legal challenges have occurred, starting with lawsuits against transportation network companies (TNCs) like Uber and Lyft. Several court cases in recent years have come down on the side of allowing such companies to continue classifying drivers as independent contractors.

Those decisions are significant for TNCs, because the gig model relies on the lower labor cost of independent contractors. Classification as an employee adds at least 30 percent to labor costs.

The issues lie with how a worker is paid and who controls the work process. — Bobby Bollinger, a North Carolina attorney

However, a March 2018 California Supreme Court ruling in a case involving delivery drivers for Dynamex went the other way. The Dynamex decision places heavy emphasis on whether the worker is performing a core function of the business.

Under the Dynamex court’s standard, an electrician called to fix a wiring problem at an Uber office would be considered a general contractor. But a driver providing rides to customers would be part of the company’s central mission and therefore an employee.

Despite the California ruling, a Philadelphia court a month later declined to follow suit, ruling that Uber’s limousine drivers are independent contractors, not employees. So a definitive answer remains elusive.

A Legislative Movement

Misclassification of workers as independent contractors introduces risks to both employers and workers, said Matt Zender, vice president, workers’ compensation product manager, AmTrust.

“My concern is for individuals who believe they’re covered under workers’ compensation, have an injury, try to file a claim and find they’re not covered.”

Misclassifying workers opens a “Pandora’s box” for employers, said Richard R. Meneghello, partner, Fisher Phillips.

Issues include tax liabilities, claims for minimum wage and overtime violations, workers’ comp benefits, civil labor law rights and wrongful termination suits.

The motive for companies seeking the contractor definition is clear: They don’t have to pay for benefits, said Meneghello. “But from a legal perspective, it’s not so easy to turn the workforce into contractors.”

“My concern is for individuals who believe they’re covered under workers’ compensation, have an injury, try to file a claim and find they’re not covered in the eyes of the state.” — Matt Zender, vice president, workers’ compensation product manager, AmTrust

It’s about to get easier, however. In 2016, Handy — which is being sued in five states for misclassification of workers — drafted a N.Y. bill to establish a program where gig-economy companies would pay 2.5 percent of workers’ income into individual health savings accounts, yet would classify them as independent contractors.

Unions and worker advocacy groups argue the program would rob workers of rights and protections. So Handy moved on to eight other states where it would be more likely to win.


So far, the Handy bills have passed one house of the legislature in Georgia and Colorado; passed both houses in Iowa and Tennessee; and been signed into law in Kentucky, Utah and Indiana. A similar bill was also introduced in Alabama.

The bills’ language says all workers who find jobs through a website or mobile app are independent contractors, as long as the company running the digital platform does not control schedules, prohibit them from working elsewhere and meets other criteria. Two bills exclude transportation network companies such as Uber.

These laws could have far-reaching consequences. Traditional service companies will struggle to compete with start-ups paying minimal labor costs.

Opponents warn that the Handy bills are so broad that a service company need only launch an app for customers to contract services, and they’d be free to re-classify their employees as independent contractors — leaving workers without social security, health insurance or the protections of unemployment insurance or workers’ comp.

That could destabilize social safety nets as well as shrink available workers’ comp premiums.

A New Classification

Independent contractors need to buy their own insurance, including workers’ compensation. But many don’t, said Hart Brown, executive vice president, COO, Firestorm. They may not realize that in the case of an accident, their personal car and health insurance won’t engage, Brown said.

Matt Zender, vice president, workers’ compensation product manager, AmTrust

Workers’ compensation for gig workers can be hard to find. Some state-sponsored funds provide self-employed contractors’ coverage.  Policies can be expensive though in some high-risk occupations, such as roofing, said Bollinger.

The gig system, where a worker does several different jobs for several different companies, breaks down without portable benefits, said Brown. Portable benefits would follow workers from one workplace engagement to another.

What a portable benefits program would look like is unclear, he said, but some combination of employers, independent contractors and intermediaries (such as a digital platform business or staffing agency) would contribute to the program based on a percentage of each transaction.

There is movement toward portable benefits legislation. The Aspen Institute proposed portable benefits where companies contribute to workers’ benefits based on how much an employee works for them. Uber and SEI together proposed a portable benefits bill to the Washington State Legislature.


Senator Mark Warner (D. VA) introduced the Portable Benefits for Independent Workers Pilot Program Act for the study of portable benefits, and Congresswoman Suzan DelBene (D. WA) introduced a House companion bill.

Meneghello is skeptical of portable benefits as a long-term solution. “They’re a good first step,” he said, “but they paper over the problem. We need a new category of workers.”

A portable benefits model would open opportunities for the growing Insurtech market. Brad Smith, CEO, Intuit, estimates the gig economy to be about 34 percent of the workforce in 2018, growing to 43 percent by 2020.

The insurance industry reinvented itself from a risk transfer mechanism to a risk management mechanism, Brown said, and now it’s reinventing itself again as risk educator to a new hybrid market. &

Susannah Levine writes about health care, education and technology. She can be reached at [email protected] Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]