Source: AXA XL

Cold storage

Cold storage is traditional construction turned inside out. Instead of designing to keep heat in during cold weather,  cold storage units are designed to keep heat out. It is estimated that cold storage units are used to store  approximately USD 200 billion of frozen or refrigerated food products every year. The use of cold storage  warehouses is not limited to food products; they are also used in other industries such as petrochemical,  pharmaceutical and high-tech electronics. Global cold storage construction spending is expected to grow nearly 24% by 2024.

Concerns

• Commercial refrigeration systems are powered by anhydrous ammonia cooling units. Ammonia leakage is a common chemical hazard that can cause bodily injury, environmental damage, and food/product spoilage.
• Improper/poor construction can lead to drafts, which can create condensation due to the temperature differential between the interior and exterior of the cold storage unit. Condensation turns into ice on various  surfaces where air leakage occurs. Ice can lead to BI claims from slips, trips and falls or property damage  claims if it raises internal temps or causes an ice blockage to part of the process equipment resulting in equipment failure.
• Moisture levels, either too low or too high can result in mold and bacteria formation inside the cold storage unit, creating the potential for a professional or pollution liability claim resulting in remediation expense  and/or or property damage from spoiled food/product.
• Process equipment within cold storage facilities requires constant maintenance and upgrades to ensure  temperature requirements are being met. Inadequate, poorly designed, facilities or insufficiently insulated  facilities bleed cold air, or are forced to run too frequently to maintain temperature. As a result of these issues,  some systems must work harder than normal, thus increasing the risk of mechanical break-down. In addition,  failure of redundant systems such as electrical process and control work can result in total loss.
• Cold environments pose significant challenges/strains to certain building materials. For example, flooring in  cold chambers should be able to withstand prolonged periods of low temperature without breaking down. This  can lead to additional expenses when the products in the cold storage unit must be relocated and stored  elsewhere to allow for repair work.

Claims

• An ammonia spill in the engine room of a catering building resulted in the evacuation of four hundred employees with several having to be checked by medical staff. As a precaution, all prepared food had to be destroyed due to health risk concerns.
• A contractor was repairing an ammonia line at a food warehouse located near a suburban neighborhood. A  valve failed during the repair work which caused the release of over 70 pounds of ammonia into the facility and surrounding residential area. More than 1,200 people reported medical conditions. The loss included bodily  injury and business interruption claims.
• A refrigeration contractor made a design error in the back-up generator system of a cold storage facility used  for commercial food distribution which was realized during a prolonged power outage resulting from a severe  storm. The failure of the backup generator led to the spoilage of the contents of the facility, resulting in  significant expense for re-design and construction of the backup power system and property damage from the lost contents.

Action Items

• Diligently plan out design details such as roof-to-wall interfaces and penetrations to minimize air leakage.  Errors can jeopardize the entire design, and potentially lead to project delays and additional costs.
• Carefully review the geographical location, type of interior space, size and the overall expected usage of the facility.
• Address items in the emergency plan such as an alternative source of power supply, repair facilities, and  availability of temporary cold storage sites. Plan evacuation routes and appoint designated employees tasked  with assuring proper evacuation and contacting emergency response personnel.

Learn More

To learn more about effective risk management for cold storage, please contact your insurance broker or underwriter for additional details and insights. For additional information on technologies monitoring site conditions, please  visit our Construction Ecosystem.