Risk Insight: Electric Vehicle Battery and Charger Risks

As electric vehicle (EV) chargers are rolled out in carparks and other premises this uptake increases some risks: notably battery fires. Lithium-ion battery fires tend to be characterised as both intense and prolonged. Both generate a higher risk of destruction as a result. The concern for property owners and landlords is the heightened risk at both residential properties and business premises where EVs are charged, parked or repaired.

The consequences of a significant fire may reach beyond damage to your own property and could also lead to business interruption, as well as loss, damage or injury to other third parties.

Implementing EV battery charger infrastructure calls for a risk management approach to planning and installation, and discussion with your broker about insurance coverage and limits.

What are the potential risks of EV battery chargers to property?

Malfunctions can cause fires or explosions, due to a manufacturing defect, glitch in the charging process or damage to the battery. This is a problem because lithium-ion battery fires can be difficult to control or suppress and they release toxic fumes. Having fire safety measures incorporated in charger design is critical.

Since the charging process generates heat the environment needs to be adequately ventilated, with cooling systems to counteract the risk of battery heat leading to damage or fire. Charging equipment and infrastructure must be appropriate for the high electrical current demands of fast charging EVs.

Using chargers that aren't compatible with the EV model can pose risks. It's important to use certified and compatible charging equipment to avoid overheating, electrical issues and other forms of damage. Electrical surge protection and voltage regulation measures are also necessary since damaged EVs are more prone to combustion.

Areas of focus when implementing EV charging infrastructure

1. Charger infrastructure installation should be carried out by competent contractors.
2. A qualified electrician needs to check if the existing circuitry will support the required electrical load for the EV charger points.
3. Unattended charger infrastructure should be secured to protect against accidental damage or tampering.
4. Due to the threat of toxic gas being released if the charger battery is damaged, adequate ventilation should be included in the infrastructure design.
5. Consider the potential impact of a malfunction, explosion or fire if something does go wrong.
6. Location of chargers, i.e. consider their proximity to nearby property that could catch fire (particularly any combustible material) and for property where multiple chargers are present, consider the spread and separation of chargers.
7. Procedures relating to safety and evacuation need to take into account presence of chargers.

Property owners' EV charger liability risks to consider

While no regulations specifically addressing risks from EV chargers have been formalised in Australia, most associated liability risks, including third party property damage and injury, may be covered in contractual agreements with the manufacturer, installer and maintenance service provider. Particular attention to the terms of these agreements is strongly advisable, and legal advice sought if the wording 'holds harmless' is included in any contractual documentation.

In practical terms property owners using EVs should always ensure:

• the EV charging area is clearly demarcated so cabling doesn't come under strain
• clear information communicating the types of EVs the charger can be used for to be stated and displayed
• prominent communication of the manufacturer's instructions for safe usage alongside the EV charger
• regular inspections are undertaken to check signage is still in place and legible, and the charger is undamaged and in good working order
• adequate fire protection equipment such as fire extinguishers and/or sprinklers are in the immediate vicinity and easy to access
• to review emergency evacuation procedures.

Allowing for the potential impact of EV charging facilities on insurance

If property owners or developers install EV charging infrastructure into new or existing properties this is a material fact that should be disclosed to insurers and needs to be considered in insurance coverage.

This may lead to raised premiums and it's expected that documented EV risk mitigation measures can be demonstrated.

Communicating EV risk mitigation measures with insurance disclosures might include consideration and information about:

• updates to the existing fire risk assessment and safety management framework
• emergency response plans updated
• if EV charging infrastructure is being retrofitted fire safety equipment should be re-evaluated for adequacy and increased accordingly
• installers and maintenance providers required to provide evidence of sufficient third party liability insurance
• EV chargers designated their own separate electrical circuit
• the property owner should understand how to isolate EV charging points in line with the manufacturer's instructions
• EV charging points should include safety perimeters and fire risk containment measures (such as lithium fire-specific retardant insulation)
• EV charging points protected from impact risks with bollards or metal barriers
• CCTV cameras used for surveillance of EV chargers.

How Gallagher can help

At Gallagher our specialists can help you recalculate the appropriate sum insured for your insurance cover, check that the terms of your policy are appropriate and assist with developing risk management protocols to meet underwriters' expectations.

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