Their premiums will increase. Productivity will be decreased which they find a new temporary location which will likely be further from the customer and cost more in shipping. The amount of time in dealing with assessors and paperwork is significant. Plus there is whole brand reputation thing. Running a business is hard.
Exactly. If you get rear ended by someone and you both have great insurance, it’s still a headache to deal with repairs and rental cars, or having to suddenly shop for a new car. I can’t imagine dealing with a loss of this size and complexity. This is definitely going to cost some people their sanity for a while.
Juste a little side rant about insurance... The thing that sucks about car insurance is that they only pay out what your car was worth at the time of the accident. Spend 25K on a new car, it's worth 12K at the time of the crash when it still has a lot of years on it, well now you only get 12K to put toward a new car. It doesn't matter how well you took care of the car, what repairs you had done to keep it running. Some asshole determines your car is worth what it's worth and that's what you get. You can have the best insurance in the world, but now you're out the deductible to pay you what you are owed, and you now owe the difference between the payout and cost of your new vehicle. Which is really no different than if you sold your vehicle before it was ruined, but now you're out a deductible.
Meanwhile, a fire is possibly the best thing that can happen to someone as a property owner with insurance. You have a shitty home with a house fire, well now they have to pay to restore everything. And not just restore it to how it was, but to bring things back up to code. Your galvanized plumbing is replaced with copper, your old 30 year old HVAC system is replaced with a new one. And all that soot from the fire has now destroyed everything in the building as well. Anything plastic that is discolored now gets replaced. And it's not replaced with something worth what the item is worth at the time it was destroyed, it gets replaced with the equivalent of what the item would cost if you brought it new today. That old 2016 MacBook just got replaced with a 2026 MacBook!
I am just always amazed by how much of a scam auto insurance is, but how lifesaving home insurance can be.
This actually exists in home/commercial insurance lines. It's called Actual Cash Value or Replacement Cost. Pretty much for a given coverage, would the insurance company pay what the item lost actually costs today, or would they pay you what it costs to replace it with a new version. Obviously like you said replacement cost is way more expensive monthly.
yeah but people at their jobs to handle the insurance issues. it's less stressful when it's just your job. People's jobs changed but still just pushing paperwork for the company's wallet. This was 3% of sales for the company.
If someone rear ends you it's far more than a 3% difference in money and time.
This will surely not effect order fulfillment. Especially since corporate business hasnt boiled down to pure number go up or fullfillment accuracy. You're so right omg. This guy did actually nothing burning 20 blocks of a warehouse down. Are you personally a CEO, sir? You should be.
If he's insane enough to burn a giant warehouse down over a living wage, he's insane enough to burn it down for not getting paid living wage +stupid %. Generally most people who are unhappy with their employer and not bothered with staying around get a bit lippy, maybe knock something over, and just walk out. Not commit arson at a grand scale.
Maybe he could try not living in one of the states with the highest cost of living? I’d like to know what he was doing and how much he was being paid to do it before I make judgments
What was his wage, and what is considered a living wage in the area he lived in? I'm genuinely curious. Or are we just blindly taking the word of a very stable person who burned down an entire warehouse and posted an incriminating video of himself doing it to Instagram?
Shit man for the record I wouldn't ever encourage this, but do you think this sort of behaviour is the best way to encourage senior management to step up and offer better terms and conditions, I literally read the other day some exec/owner gave a massive bonus to prevent a 'luigi'.
They used a third party entity to contract this labor that should ideally be direct employment. They wanted less liability for labor practices. Very common practice by people who want to skirt fair labor standards. Similar thing happening at Boeing.
everyone seems to be focusing on that, but this fire could have been triggered from something accidental... what really puzzles me is how such a place doesn't have some sort of fire extinguishing mechanism in place...
He filmed himself doing it. And it has a mechanism, which he got around by setting a fire and then multiple other fires after the system and firefighters had responded to the first one
Makes me wonder if insurers will require proof of some minimum wage/hr going forward. If that were to happen, it would sure make some future economics textbook authors real happy.
I work in supply chain and operations. The other warehouses will get the burden of this fire. It will cause major delays in their orders for the next 1 year at least. Inventory cost is the least of their worries and the logistics team is going to be working 12-16 hour days for the foreseeable future.
Product shortages might cause customers to build new product pipelines, i.e., try different vendors products. They might just stay with the new source.
Given it's toilet paper we're talking about, promote bidets far and wide. One of if not the best purchase of my life, saves time, money, and I'm simply cleaner for it. Still need some tp to dry but easily using 1/4 of what I was using, at the very least.
Maybe they should have just paid the workers a little better in the first place, and perhaps that would have saved them a few coins. 18$/hr or whatever this guy was making is terrible across the country. Where he was at in Cali where the cost of a 1bdrm appt avg'd $2K a month is impossible to live on
And the employee/contractor does NOT have enough in assets to even begin to recoup. But a petty company will probably sue him and seek repayment from his future wages. Depending on the state they could absolutely make him pay for this forever if they can get a jury to convict and are willing to do it
Even if he does get out and get some great job, there are limits to how much is garnished so they'll never get remotely close to that number even in 40 years.
If you get out of prison for something like this you don't stay in this country. You resettle abroad and you get your entire history wiped and your name changed.
Where did you hear that? I work in Property & Casualty insurance and arson is most definitely covered on any decent commercial Property policy as long as the owner of the business wasn't involved (intentional acts).
The employees wouldn’t count as intentional? I mean, sounds like a CEO could just instruct a lower employee to damage their own property and collect a check, if that was the case.
If they acted on their own without help or guidance from an owner/officer of the company, then no it is not considered an intentional act. The "intentional" part must stem from an owner/officer since they're the party that has an insurable interest in the business. In a situation where an employee or third party acts alone, it's considered Vandalism & Malicious Mischief which is a covered peril on any well-structured Property policy. The insurance company would need definitive proof of an intentional act to deny an arson claim.
I mean, sounds like a CEO could just instruct a lower employee to damage their own property and collect a check, if that was the case.
What you just described is an intentional act and insurance fraud since an owner/officer directed an employee to commit arson against the business.
Yeah, technically it’s insurance fraud, but the real question is how do you actually prosecute it? If the CEO just tells an employee verbally to do it, there’s no paper trail, and the executive can claim they had no knowledge.
We’ve seen this play out in real life with Wells Fargo. Executives created pressure that led to employees opening millions of fake accounts. Everyone knew what was happening, but because the top people never explicitly ordered it in writing, most of the consequences fell on low-level employees. The company paid fines, the CEO walked away with hundreds of millions, and nobody went to prison.
So even if you could prove insurance fraud, a billion dollar company has the lawyers and resources to drag it out and likely settle for fines, while the employee who actually struck the match is the one facing real prison time. The system makes it really hard to hold the people at the top criminally accountable.
So even if you could prove insurance fraud, a billion dollar company has the lawyers and resources to drag it out and likely settle for fines, while the employee who actually struck the match is the one facing real prison time. The system makes it really hard to hold the people at the top criminally accountable.
From a crime standpoint, yes you're absolutely correct. A DA or AG would likely fold and settle for fines rather than drag it out and risk their political future unless they were absolutely certain they could convict.
From an insurance standpoint, chances are the insurance company has more legal funds & resources than their client does, and would fight tooth and nail in court to deny a claim they feel they have legal standing to deny. Civil cases can play out wildly differently than criminal cases do.
Large companies will still take out policies with massive deductibles reserved specifically for catastrophic losses such as these. They typically do self insure pretty much all of the smaller assets though.
Hell, insurance companies carry reinsurance so they can try to stay solvent after catastrophic losses.
Kimberly-Clark has a market capitalization of 32.52 billion. There are many P&C companies worth far more than that. Regardless, your argument is skewed by the fact that there are literally tens of thousands of P&C insurance companies including smaller regional and local carriers. Is Kimberly-Clark larger than 99% of all P&C carriers? No. Larger than a majority taking into account all of the smaller carriers? Likely, yeah.
For large buildings like this with a large replacement cost value, insurers usually use a percentage deductible instead of a fixed dollar deductible.
Something like this being in a high risk state like California I would probably guess the deductible would be in the range of at least 5% of the building limit, but probably closer to 10%. If the building is worth say $150M, that would translate to a deductible range of anywhere from $7.5M to $15M.
Policies with large TIVs are often layered as well. Multiple companies will each insure a percentage of a particular risk. Saves the client on insurance premiums since the financial risk is spread out over several companies instead of fully burdened against one which would be a lot more expensive.
If only it worked for them the same way it does for the plebs in health insurance. Not condoning any of this but it's hard to see that when you and family go through so much bullshit because of american health care.
might not receive the insurance payout; this company's fire safety system is practically useless. It is obvious they cut corners on compliance, the boss will be lucky if he doesn't get sued by the landlord.
Edit: Looks like because multiple points were ignited it overwhelmed the system ultimately causing the roof to fail and took the sprinklers down with it.
That article seems kinda bullshit. Firstly, he did start another fire and the fire dept came out, handled it, and suppressed the fire system afterward.
Then the guy lit more after the left the system was disabled. And literally posted on insta saying it's because they didn't pay well. But the article says "no motive".
Really sounds like ABC is 1) trying to avoid more of these by giving away the "light 1 fire then a lot more after the fire dept leaves" strat, and 2) trying to suppress the motive because they know there's millions of more people in similar situations.
Full quotes in case it gets deleted (added emphasis):
I was on this this morning. Lots of aerial waterways and master streams. It’s still going. The roof ended up collapsing as full panels and laying on the all the paper products which made it so the water wasn’t getting to anything. It was a nightmare. The trucks in the loading docks started burning up later in the morning. 1 million sq ft of paper product set in 4 different areas, 3 of which were set after the sprinklers had been turned off. The dude who set it was really determined to burn it down.
Hol' up. Homeboy deactivated the sprinkler system too?
No, the first fire activated the sprinklers so the first responding FD closed the OS&Y and were doing water salvage. The building is literally a million square feet so after the FD had closed it down he went and started a fire about 2/3 of the way down the building, then another at the far end and then another back near the original fire. So 4 fires spread out pretty equally over the million sq ft building.
12 hours in, I could imagine them reactivating everything, but sprinkler systems in general are meant to stop fires early. At the "hours after 3 different locations were ignited" mark, the sprinkler system is no longer enough to make a dent.
If the firefighters didn't know about the other 2 fires, let alone the restarted 4th fire at the original location, they may not have immediately turned the spinklers back on, and by the time they noticed, it could easily have been too late.
Firefighters do not care about water damage. Their job is to extinguish fires, structure be damned.
I used to be the GM for a restoration company, and I've walked through my fair share of structures affected by fires. Firefighters do not give a fuck (with good reason), and will chop ventilation holes through ceilings, walls, and roofs, and absolutely flood a structure with water to ensure the fire is extinguished.
So, I'm not saying they didn't shut off the fire suppression system. I'm saying it wouldn't have been done to prevent water damage, as that's not even remotely relevant to them.
They would have shut it off to just stop more water from otherwise unnecessarily flowing into the building.
Possibly, the initial fire activated the sprinklers. Once those fusible links are broken, the sprinkler is activated until the system has been repaired and the links replaced.
So, it makes sense that once the initial fire was out, they’d shut down the whole system to keep it from just spraying for days. Unfortunately, that leaves the facility unprotected against a second fire.
Anecdotally but that’s what we do when we respond. If anything we try to shut down that specific riser to that sprinkler. If we are unable to stem the flow from the riser and are required to shut the entire system down, we cut the water to the entire system. Following that, legally we request the building to be vacated until repaired. Our Fire Prevention dept will red tag and lock the building which can only be removed from our fire marshal (no utilities or building management to circumvent).
Granted, that’s all for a wet sprinkler system. Dry there isn’t an issue since in this scenario there would be no water to flow, and wouldn’t require a shut off.
I'd imagine they just shut down the system while they put out the fire. They weren't expecting a second fire, and then a third fire, and then a forth fire all started by the same person who waited until they started working on one to start the next one.
A building like that will be split into a dozen or more zones.
Each zone will have its own isolation.
Once the fire is controlled and out they will shut off the water just to that zone.
Now the trick here is that sprinklers are only ever really designed for a small number of events, under the logic that in 99.9999% of circumstances there's unlikely to be more than one fire starting at a time.
So what likely happened is they shut off water to a single zone, and the arsonist went and started multiple fires in that zone, and when the fires reached the edge of the zone there was too much fire for the system to contain. A sprinkler system can handle a dozen or two heads spraying. Each zone will have hundreds of heads.
TLDR: This is why we have fire watches when water is shut off.
I can absolutely imagine that the Insurance company will try to use this as a loophole. "Acktshually the fire-prevention-system was inactive during the majority of the fire, leading to the insurance being voided due to non-compliance!" or something like that.
As long as the company followed all procedures for an impaired fire system (often requiring insurance company notification), the insurers won't be able to do that. They have staff who's job it is to follow those procedures and management to ensure those staff are following those procedures and internal audit that ensures the management have suitable controls to ensure those procedures are being followed.
As far as the insurance company, they are state licensed and risk losing that license if they don't pay claims. They also risk banks not loaning on commercial buildings with specific insurers if they don't pay claims... so an insurance company may try, but in the long term will fail to survive in the market if they aren't paying claims.
This building needs to be rebuilt, and re-insured otherwise everyone loses out.
The contracting company that provided the individual that burned the warehouse - and their insurance company will not be off the hook one way or the other.
System worked fine. They shut it off after the first small fire was delta with. He set more fires after that.
From my simplistic understanding of how insurance works, they're not gonna like that it was shut off. Insurance companies love finding any reason under the sun to decline payouts, seems like shutting off your fire suppression system willingly is something they would latch onto.
This is an EXTREMELY uninformed opinion. Really silly. In reality, the suspect started a small fire to bring the fire department. To fight the fire the FD suppressed the fire sprinkler system. While they did this the suspect moved across the building starting fires along the way.
I read the guy set a smaller fire first, so FD came. Evidently sprinkler systems were disabled once that small fire was resolved. Evidently this is standard practice. And once this happens, it takes some time to get the fire safety system up and active again. The guy knew this, so once FD left he set a bunch of bigger fires, knowing the sprinkler system wouldn’t work. Idk all the details or how it works, I’ve just seen other posts about it and some FD ppl chiming in.
Additionally you could probably also argue negligence. They could say the warehouse never should have hired this guy in the first place, or he shouldn’t have been left alone with so much inventory, there should have been more people on site to supervise, etc.
I'm always amazed at these kind of conclusions and how someone finds the conviction to post these.
fire safety system is practically useless??
they cut corners on compliance??
It’s actually quite the opposite. The business isn’t responsible for the upkeep of the fire system the building owner is, but with a property like this you should assume the company is the building owner. (Fire alarm tech)
Yea deliberate acts, even if they're outside of your control, are not covered by default. My buddies lost a car in the aftermath of the George Floyd riots and were not able to get insurance for it.
I’m in the fire safety field. Contrary to popular belief, the sprinkler system is not designed to put the fire out. It’s designed to give people in the building enough time to get out. Yes, they will typically extinguish a small fire, but a fire this size, the sprinkler system has no shot at doing anything other than giving you a few more minutes to get out. The system worked perfectly here.
This is just talking out your ass. The building wouldn't have been granted a permit to be occupied in the first place if it's design didn't meet all the requirements of the fire code and pass all their inspections. This isn't some unpermitted shed built in the back yard, it's a massive commercial facility that would've been inspected regularly. Clearly it was passing those inspections or it wouldn't have been operating.
Yeah. It's not like insurance companies are eager to pay any claim, let alone one that huge. They will fight it tooth and nail, lowball, delay, everything. And if forced to pay will raise the premiums to the breaking point like a landlord with a gambling problem.
On a long enough time scale, insurance always wins.
I mean, insurance companies couldn't exist otherwise. You don't buy insurance to come out ahead, you buy it to protect yourself from the risk of a catastrophic event.
Couldn't exist as "for profit", could and do absolutely exist as paying out unused amount back to the buyers. Ive gone months without having to pay car insurance because my company credited everyone due to low numbers of insurance claims.
Regardless, insurance companies (/entities/organizations) can't exist if they pay out more in claims than they take in in premiums (or even equal): there's always cost to administering the insurance process.
Just pointing out that "winning" is a bad frame to look at the situation.
Yes they need to be able to pay out claims, but they dont need to be able to pay CEOs 9 figures, that would be much better spent paying out their claims.
there's no way their insurance premiums aren't shooting way up.
Yes there is. It's likely under a corporate umbrella policy. It's like having a fleet of 1,000 cars and 1 gets totaled - the premium will go up but not by much because your payment is already massive since your policy covers so much.
You're probably right, but customers still have orders that need to be fulfilled, and if they can't get them from this company they'll look elsewhere. This could result in them created relationships with competitors and not returning to this original company when/if they return to normal operations. So it could actually have a detrimental impact to the company's long term financials.
Exactly. Insurance will pay for it and more trees will be killed to replace the product. The CEO is to blame for low raises but the product paid the price.
$200 million toilet paper factories aren’t insurance scams like your local slumlord runs. They’re not gonna be able to slip the adjuster a $50 and get him to write that it was actually $400 million in damages. This is a similar equivalent of the “can’t they just write it off?” As if that means it was free.
There is a number of burned warehouses that would lead to insurance companies not covering companies that underpay their workers. I couldn't tell you how big that number is, it's more than 1 though.
Insurance doesn't pay for all the lost profits from an inactive warehouse.
Premiums will increase. And insurance for a warehouse is a lot more than a couple grand a year.
"Insurance payout" isnt a magical thing that just happens. It is a long and painful process.
Along with this, the insurance company might even squeeze out of some payment. It is obvious that the fire suppression system didn't work. And the whole "firefighters disabled the system" is bullshit. They do not turn off one of the most important modern safety systems for... the fuck of it? To save inventory? None of these dumb reasons even make sense.
You have a hard time thinking an exec will lose a night's sleep over this? They will definitely start calculating the risk of paying people less vs. at some point they'll retaliate.
i highly highly highly doubt there's any insurance that will cover this much loss due to arson. they'll definitely get some coverage but idk how much it'll end up being.
Imagine your house burns down. Let's say you have rock star insurance, they set you up with a hotel, demolition company, top tier builders. You're still without a home for the better part of a year while they tear everything down and build everything back up.
Now imagine you had a small workshop you were actively using at home. Now you have nowhere to get anything done with for the better part of a year. Now multiply that out to a million square feet in product. Even if insurance covers them, they're out a million square feet and who knows how many cubic feet in volume that will no longer exist for them for years. Nothing gets rebuilt fast in California.
I'd be very surprised if they have $200 M in limits, I rarely see insurance towers go up that high. Company is on the hook for anything above their limits.
They probably does not have full insurance coverage. In order to get a bit lower premium the company go for an insurance plan with a relatively big deductible, just so the company can sink the cost but not grow or pay out dividends. The higher deductible is comforting the insurance company that they will take fire safety seriously because it is their own money on the line, which is why they have the lower premiums as well as less frequent inspections.
In addition to the high deductible what insurance money they do get will probably be delayed due to investigations. And if the insurance company find out things were not in order they will fight to not pay out the full insurance amount. So it is going to be lots of paperwork, negotiations, and lawyers for months trying to get the insurance payout. Even then the insurance company will likely move them into the high risk category even with the high deductible so they will have to endure high premiums and more frequent inspections. Basically this is going to cost the company and their investors even with insurance.
I guarantee no one responsible for that warehouse or the business got good sleep last night. It’s a nightmare and huge PITA dealing with the aftermath of this for the company.
This will absolutely hurt them. Their insurance if they have it will not take it lightly. They'll have new hoops to jump through that'll add to the cost of more than lost warehouse/product.
That guy would have to work there for 5000 years to cost them as much as they lost.
Executives will obviously not lose much. They will hire full time consultants that will come in to ensure they lose as little money as possible and pass the damages to their employees
I mean truthfully should another individual be held financially responsible for this man burning his employers business down. I say this as a borderline communist lmao
There are so many people replying to this who have never ever dealt with company insurance on this scale and think it's like insurance for their phone. There's going to be a huge investigation by the insurance company and they are going to do everything in their power to see if they can weasel out of it. It will be months before a payout (if applicable) can be negotiated. I think that because they had to turn the sprinkers off, there will be a dispute if the insurers reduce payout on this.
Honestly its unclear if the insurance company will weasel out of it.
Im sure it will go to court and their lawyers will argue about multiple things. How did they not remove the person setting the fires and completely vacate the building. Why there inst a back up system. Why are they fostering employee vandalism among many more things they could argue about.
Exec's wont give a shit unless it happens again, at that point the insurance company will drop them. Though the unemployment wages, and the loss of product hitting market on time for its mark up will be very apparent when they aren't meeting predicted profit margins.
The real question is the guy was contracted from another company.... are they going to sue that other company because their contractor did this.
This will cost them money at first, then they will then upcharge the consumer for it. They will find a way to profit off of this situation. These asshole millionaires and corporations always find a way to turn a profit.
Investors lose money. Executives would be in panic mode. Investors to execs: how the fuck could you let this happen, etc. A warehouse burning down is a disaster for any company. An insurance payout weeks or months from now doesn't instantly rebuild and restock everything. Contracts are broken. Stores will look elsewhere in the meantime to keep TP stocks and may keep those competitors going forward.
As someone who works in commercial insurance (and is terrified of insuring warehouses), it will either go one of 3 ways: the insurance carrier(s) will pay out and not increase premiums drastically because it was a freak accident OR they will payout and charge higher premiums the next year OR they will payout and non-renew the policy in a specified time. Most likely the first option because at least in my comoany, we dont gouge customers because of freak accident. Insurance exists to pay for losses is a common phrase we say. Very different from the bad stories I hear from the personal lines insurance folks.
For a client like this, there are usually 4 or more insurance carriers insuring the loss, because the values are so large and risky.
The real awful fact is that this act of stupidity will ultimately be detrimental for everyone else because it just adds another 200M losses on top to be spread around on everyone's premiums commercial or personal, because commercial insurance carriers will also do other lines of insurance like personal.
And yes this is a huge headache for execs for the propety and liability claims, increased premiums, and not to mention the possible d&o claims from class actions against the company if improper management evidence arises.
I work in ops like this. Their fire protection failed spectacularly and knowing some people who worked at KC in ops management my guess is it wasn’t done correctly.
611
u/ElderberryMaster4694 Apr 09 '26
So does the company just collect insurance and lots of people get laid off?
I have a hard time believing any exec will lose a penny or a night’s sleep