GENERAL MERCHANDISE STORAGE WAREHOUSES
Description of operations: General warehouses offer long- and short-term storage to both business and residential customers for all types of transportable property. The length of storage varies from a few days to years, depending on the customer’s need. Services may include packing, pickup, delivery, and unpacking as well as storage. Some sell boxes and packaging supplies. The warehouse may be open 24 hours a day. While many warehouses are associated with or are part of moving operations, others may be associated with or part of specific operations storing only a consistent type of stock, such as a parts warehouse for a machinery manufacturer.
Property exposures are high. Ignition sources include electrical wiring, heating, and air conditioning systems. The combination of faulty or inadequate electrical wiring and equipment malfunctions, open construction, and large quantities of combustible stored items and packaging materials can lead to a severe loss. All wiring must be up to code and adequate for the operations performed. There must be adequate aisle space to allow firefighters to carry out their duties. When another party does the packing, the warehouse will not know the type of property being stored or its potential fire hazards. If rack storage of crates and boxes is used, there should be sprinklers in the racks. The sprinkler heads must be located high enough to avoid accidental contact with forklifts, but with enough clear space from the racks to allow unobstructed operation in the event of a fire. To reduce catastrophic losses, firewalls and fire divisions should separate the storage areas. Good housekeeping and fire controls are critical. Smoking should be prohibited. Forklifts should be refueled in a separate, ventilated area away from combustibles. Stored property may be a target for thieves. Appropriate security controls must be taken, including physical barriers to prevent entrance to the premises after hours and an alarm system that reports directly to a central station or the police department.
Business income and extra expense exposures are high as replacement facilities may not be readily available.
Inland marine exposures include accounts receivables if the warehouse bills customers, computers for tracking inventory, contractors’ equipment, valuable papers and records for customers' and suppliers' information, and warehouse operators’ legal liability. Contractors’ equipment includes forklifts, cherry pickers, and hand trucks used for moving stored items. Goods in transit coverage is needed if the operation includes pickup and delivery of customers’ goods. Outdoor signs can be struck by lightning or vehicles, be blown over in heavy wind, or collapse due to the weight of ice and snow.
Crime exposure is from employee dishonesty. Pre-employment background checks, including criminal history, should be performed on all employees handling money. Storage operations involve many transactions and accounts that can be manipulated. Loading docks should be supervised to minimize employee theft of goods. Two employees should be required to confirm the accuracy of deliveries. There must be a separation of duties between employees handling deposits and disbursements and reconciling bank statements. Regular audits, both internal and external, are important to prevent employee theft of accounts.
Premises liability exposure is limited due to the lack of public access. Customer access should be limited to specific waiting areas and kept clean, dry, and free of obstacles. Steps and uneven floor surfaces should be prominently marked. Sufficient exits must be provided and well-marked, with backup lighting systems in case of power failure. Proper attention to housekeeping is needed to prevent trips, slips, and falls. There should be a disaster plan in place for unexpected emergencies. Parking lots and sidewalks need to be in good repair with snow and ice removed and generally level and free of exposure to slips and falls. If the warehouse is open after dark, there should be adequate lighting and appropriate security for the area.
