As fire-related claims continue to pose a serious threat to commercial operations in Australia, insurance experts are urging businesses to elevate their fire prevention strategies. According to Gallagher, one of Australia’s leading insurance brokers, a stronger emphasis on fire separation and regular risk assessments is essential, especially for companies operating in high-risk sectors or fire-prone regions.
Structural Fire Separation: A Key to Containing Damage
Fire separation, which involves using physical barriers to stop fire from spreading within a building, is gaining renewed focus from insurers and commercial property owners alike. By integrating fire-resistant materials into walls, ceilings, floors, and doors, businesses can confine fires to a limited area. This not only protects valuable assets such as server rooms and machinery, but also minimises downtime.
While new construction projects offer more flexibility for incorporating fire-resistant design features, existing buildings can also be retrofitted. Gallagher’s risk advisory team suggests retrofitting fire doors, sealing off duct pathways, and creating dedicated isolation zones to enhance passive fire protection.
Importantly, the National Construction Code outlines mandatory fire separation standards based on building type and use. Businesses that lease commercial space should also request access to fire risk reports and maintenance records from their landlords, as insurers often require these documents during underwriting or policy renewal.
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EPS Insulation: A Hidden Hazard in Many Buildings
Expanded polystyrene (EPS), widely used in industries such as cold storage and food processing, remains a serious concern for insurers. Gallagher warns that EPS panels can contribute to rapid fire spread if proper fire prevention protocols are not in place.
To reduce risk, businesses should seal all wall openings, keep ignition sources away from EPS surfaces, and install electrical systems in fire-retardant conduits. Additionally, charging stations for electric vehicles or forklifts should be positioned away from EPS-lined walls to avoid unnecessary ignition points.
Insurers increasingly demand documentation proving that businesses are managing EPS-related risks. This may include thermographic scans, fire system maintenance logs, and detailed handling protocols for flammable substances.
Ongoing Fire Insurance Risk Assessments Are Critical
Routine fire risk assessments are essential—not just for maintaining safety but also for ensuring continued insurance eligibility. Common workplace fire hazards include faulty wiring, overloaded power strips, unmonitored heat-generating equipment, and careless storage of flammable materials.
Australian Standard AS1851 requires the regular servicing of fire systems such as extinguishers, sprinklers, and alarms. Gallagher recommends that these safety checks be embedded into a company’s broader risk management strategy, with all compliance efforts well-documented.
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Educating Homeowners on Fire Prevention
Gallagher isn’t only focusing on commercial risks. The firm has also released a comprehensive fire safety guide for homeowners, offering room-by-room advice to reduce fire hazards. From the kitchen to the backyard, the guide highlights triggers such as unattended cooking, poorly maintained appliances, and improper lithium battery storage.
Homeowners are advised to test smoke alarms regularly, create evacuation plans, and inspect electrical wiring, especially in older homes. As lithium-ion batteries become more common in devices and vehicles, awareness around safe storage and charging practices is also rising.
Be Prepared: Fire Insurance and Wildfire Risk
Whether you’re a business owner or homeowner, Gallagher emphasises the importance of reviewing your fire insurance coverage. Many policies have exclusions that can leave policyholders vulnerable if they’re not clearly understood. Gallagher advises ensuring that your policy covers the full cost of rebuilding or replacing your assets, not just partial losses.
Keeping an up-to-date inventory of assets, including photos and receipts, can significantly speed up the claims process in the aftermath of a fire.
Meanwhile, climate change and urban development have contributed to an alarming increase in wildfire activity globally. According to Allianz Commercial, insured wildfire losses jumped from US$8.7 billion in the 2000s to over US$56 billion in the 2010s. Catastrophic events like the 2025 California wildfires, which caused up to US$40 billion in insured losses, underline the growing financial stakes for the global insurance industry.
Related: RACV Urges Australians to Prepare as Weather-Related Insurance Claims Surge
The Bottom Line
Fire prevention is no longer just a safety issue; it’s a business-critical insurance concern. Whether you’re overseeing a commercial warehouse, managing a food processing facility, or simply protecting your home, proactive fire risk management is key to securing coverage and minimising losses. Now is the time to act, because the cost of inaction could be devastating.
