TT Talk - COVID-19 risks: unoccupied premises
Despite being designated as essential services in many countries, in accordance with local government and World Health Organization (WHO) guidance, many businesses within the global logistics sector have had to change their work practices. In some cases, this may include leaving business premises unoccupied for an extended, indefinite period.
While the impact on logistics operations necessarily differs around the globe, many entities are having to consider ways of carrying on business while also protecting their workforce. Some have been able to facilitate remote working, where tasks can be appropriately carried out and the infrastructure supports it. The ability for entities to facilitate remote working depends not only on computer equipment and robust communications, but also the physical environment (often homes). Some have had to take more painful business decisions where infrastructure is not appropriate or trade has fallen away. In either situation, premises containing assets, equipment and cargo may be left unoccupied.
Where prudence is not exercised, unoccupied premises and the contents therein can be at an elevated risk.
Consider multiple and varied contractual obligations
Care and good judgement needs to be exercised where stakeholders are considering vacating premises – or have already done so – to ensure that the business is protected, property preserved and associated liability exposures mitigated.
It is recognised that there are various contractual or leasehold arrangements underpinning operational premises and warehouse operations. Some premises will be owned outright, many will be leased from a landlord and many more will be multi-tenure facilities, with a number of businesses operating from the same location. Such detailed circumstances can be complex when temporarily vacating a premises; there is potential, for instance, where multi-tenure facilities are concerned, that one business is categorised as ‘key’ and therefore remains operational, while others are not and are consequently forced to close.
Such circumstances may give rise to challenges concerning insurance, safety, security and utilities, amongst others. Where multi-tenure facilities are concerned, as with general safety principles, communication and collaboration with fellow tenants will be critical to achieve a successful outcome. Once the contractual position is understood, there will likely be the need to notify landlords and other tenants when vacating a property for any extended period, where applicable.
Beyond contractual and leasehold obligations, stakeholders should consider all insurance policies applicable to the premises. Some may include warranties regarding periods of vacancy that perhaps involve notifying insurers and recording regular inspections of the premises. This could also prove a timely opportunity to verify the total value of cargo held on the premises to ensure that it does not exceed the level declared under any applicable cargo or warehouse insurance policy.
Under storage or freight contracts, as well as by regulation or a general duty of care towards your customers, the need to maintain the property remains.
This may involve routine checks on fire-fighting equipment and sprinkler systems through to portable appliance testing (PAT) and drain clearing. It is important to ensure that ongoing maintenance programmes are considered during periods of unoccupancy. Debris in drains, pipes and guttering for example may continue to build regardless of operational activity, which could give rise to unwanted water ingress or flooding.
Consider all people
Where contractors are required to access the property to undertake inspections or maintenance, consideration must be given to safety. Supervision will typically be required and the necessary time should be given to site inductions and due diligence to ensure that any contractor is adequately trained to perform the task. The risks in this context are heightened where contractors are required to work alone, possibly with hazardous materials, at height, in enclosed spaces or when undertaking hot works. Established permit to work systems should be carefully monitored during such periods.
Consider fire and security
The risk of catastrophic fire is heightened where the property is unoccupied for an extended period. Prior to vacating a property it would be prudent to check maintenance records for electrical systems, fire alarms, sprinkler and fire-fighting equipment to ensure that, as far as is reasonably practicable, all are in good serviceable order. If your fire alarm is linked directly to the local emergency services, it is advisable to check that the system remains operable and discuss the period of vacancy with the local emergency services.
Security provisions should also be carefully considered. What volume of cargo, commercially sensitive data and cash are kept onsite? Are there options to relocate high value items temporarily? Are there effective deterrents in place such as a perimeter fence, good lighting, signage and visible CCTV coverage? Are these deterrents in good working order, fit for purpose and, where applicable, monitored? Does the CCTV equipment require regular maintenance to ensure continued operation and can this be accommodated? Have all external doors been closed and locked, is the building alarmed and a full record maintained of designated key/code holders? Where commercial vehicles are parked on the premises, have all valuables and cargo been removed, are the vehicles locked and is there an adequate key control procedure in place?
In the context of protecting your business, it is prudent to ensure that all records of maintenance, security provisions, inspections and relevant correspondence (with, for example, landlords and insurers) are securely retained.
Whilst not exhaustive as each situation will be unique, TT Club has developed an ‘unoccupied premises’ checklist that may assist stakeholders in assessing the risks associated with vacating their premises for any extended period.
We hope that you have found the above interesting. If you would like further information, or have any comments, please email us, or take this opportunity to forward to any colleagues who you may feel would be interested.
We look forward to hearing from you.
Risk Management Director, TT Club