Mitigating Fire Risks in Auto Recycling Yards: What Producers Need to Know

Fires remain the #1 risk for auto recyclers—here’s how to help your clients prevent the worst-case scenario

If you’re working with clients in the auto dismantling and recycling industry, it’s essential to regularly remind them of the serious fire hazards that continue to lead the pack in both claims frequency and severity. From torch use in dismantling bays to improperly stored lithium-ion batteries, the risks are real—but so are the solutions.

Whether your clients are processing vehicles for parts or shredding metals for resale, proactive fire prevention strategies can mean the difference between a manageable incident and a catastrophic loss. Below are updated best practices that every producer should share with their clients today.

Ditch the Torch—Seriously

Yes, some dismantlers still use cutting torches—but it’s time to move on. Using open flame tools indoors is not only outdated, it’s dangerous. Encourage clients to replace torches with reciprocating saws or other spark-free tools. They’re safer, more efficient, and widely available.

One recycler who experienced a total loss fire stated, “Torches have no place in modern dismantling operations. We rebuilt with sawzalls only—and haven’t looked back.”

Hidden Dangers: Lithium-Ion Batteries

Today’s auto recyclers face a growing threat: fires sparked by lithium-ion batteries, especially as electric and hybrid vehicles become more common. While many operators already remove EV batteries before stockpiling, smaller lithium-ion cells (from phones, vapes, etc.) are often missed—and they can ignite under heat or compression.

Advise your clients to:

• Train staff to thoroughly inspect vehicles for stray batteries.

• Avoid large scrap metal piles—smaller ones are easier to control in a fire.

• Implement strict EV battery storage protocols away from heat sources.

Fire Training & Preparedness

A fire response plan is only as good as the team implementing it. Ensure your clients:

• Conduct regular fire safety training, including extinguisher use.

• Keep well-marked, fully charged extinguishers in all key locations—and inspect them monthly.

• Schedule annual fire drills and update safety plans regularly.

One operator shared how their team used over 50 extinguishers to contain a blaze until firefighters arrived. Preparation matters.

Housekeeping Isn’t Just Clean—It’s Fire-Safe

Tidy yards are safer yards. Good housekeeping limits fuel sources, improves visibility, and helps emergency vehicles navigate the property.

Top recommendations:

• Separate dismantling and fluid recovery operations into different buildings.

• Properly drain and store portable fuel tanks in UL-certified containers daily.

• Keep pathways clear, doors between buildings closed, and landscaping trimmed back.

Business Planning & Insurance Essentials

As your clients expand or update their operations, make sure their coverage keeps up. Undervalued property insurance can be devastating in a loss.

Producers should:

• Conduct annual insurance reviews to reflect new equipment and growth.

• Encourage clients to document buildings and equipment via video/photos.

• Recommend creation (and regular updates) of a business continuity plan that includes:

  • Offsite data/file storage

  • Payroll continuity

  • Alternate worksite arrangements

  • Supplier and customer communication strategies

Said one business owner who survived a major fire: “Our other location saved us. Without a continuity plan, we wouldn’t be here today.”

Final Thoughts for Agents

As an insurance producer, you play a crucial role in educating clients on proactive risk management while ensuring their policies reflect current operations. Fire prevention isn’t optional—it’s foundational to a sustainable business in the auto recycling world.

If you’d like to learn more about loss control resources or discuss coverage options for your recycling clients, contact your Arrowhead Underwriter today.

And if you’re looking to grow your portfolio with a specialized program that truly understands the auto dismantling space, be sure to check out our Automotive Recyclers Insurance Program.

This blog was originally shared here; this post has been refreshed and republished here to reflect current insights.