N.J. WAREHOUSE DESTROYED BY FIREPosted On: Jan. 14, 1996 12:00 AM CST
ELIZABETH, N.J.-Property insurers for the Port Authority of New York & New Jersey are facing a loss that may reach $15 million following a fire that destroyed a huge warehouse last week.
The 200,000-square-foot Port Authority warehouse in Elizabeth, a seaport south of Newark, caught fire about 5:30 p.m. last Wednesday and suffered an explosion several hours later as the building continued to burn.
About 125 firefighters battled the blaze, including the entire Elizabeth fire department and crews from the fire departments of several surrounding towns, according to William Scott, an Elizabeth Fire Department battalion chief.
The fire was brought under control at 11:45 p.m., but firefighters continued to battle hot spots in the collapsed structure Thursday, Chief Scott said.
One concern of officials was the possible release of toxic chemicals from the warehouse, which was leased to several tenants including at least two trucking companies.
Material stored at the warehouse included boron trichloride, a poisonous gas. However, state environmental officials tested the area and found no traces of the substance, according to Chief Scott.
The warehouse building appears to be a total loss and will likely generate a replacement cost claim by the Port Authority of between $12 million and $15 million, according to Robert Remler, executive general adjuster with GAB Services Inc. in New York.
"The side walls remain there, but there's nothing left, for all practical purposes," Mr. Remler said.
This estimate does not include loss of property stored inside the warehouse by its tenants, which included trucking companies Cace Transportation Inc. and Dan Transport Corp.
A Cace employee referred questions on the fire to the Port Authority. Dan Transport officials could not be reached.
The Port Authority's property program includes a $100,000 self-insured retention, according to Barry Glick, manager-risk financing for the Port Authority.
A $10 million primary layer is written by three units of American International Group Inc.-American Home Assurance Co., Insurance Co. of the State of Pennsylvania and Lexington Insurance Co.-and Zurich Insurance Co., he said.
A second layer with limits of $85 million excess of $10 million is divided among 13 insurers, Mr. Glick said.
Two days before the fire, heavy snowfall had caused an approximately 30,000-square-foot section of the warehouse's roof to collapse, knocking out the building's electrical system and causing about $500,000 in damage, GAB's Mr. Remler said.
A contractor hired by the Port Authority had begun working to shore up the roof and clear away debris before the fire broke out, Mr. Glick said.
The cause of the fire was still under investigation last week.
Mr. Glick noted that the Port Authority's insurers could demand that it absorb two retentions, one for the roof collapse and one for the total loss of the warehouse.
In that case, though, the Port Authority would have two separate claims for the roof damage and the fire, he said.
Whether this situation actually develops will depend on "how the numbers work out," he said.
Meanwhile, the fire could also generate a business interruption claim from an IKEA home furnishings megastore located several hundred feet from the warehouse. The IKEA store was evacuated on Wednesday and remained closed Thursday as fire equipment blocked the main road leading to the store.
IKEA may be able to file a business interruption claim with its own property insurers, Mr. Remler noted.
IKEA officials could not be reached.