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24 June 2024

Understanding the risks of electric vehicle batteries and chargers

The number of electric vehicles (EVs) on our roads has grown exponentially in recent years as EVs have become increasingly popular for personal and commercial use.

All motorised vehicles come with risks and EVs are no exception. In particular, the lithium-ion batteries used can pose a significant fire risk if they malfunction when charging. This warrants a strategic approach to risk management when planning to install EV charging infrastructure at your home or business.

Mark Taylorson, Gallagher Head of Specialisms, explains how the growth of electric vehicles in New Zealand is causing the insurance landscape to shift.

Fire risk of lithium-ion batteries

When a lithium-ion battery is damaged or exposed to extreme temperatures, it can overheat rapidly and ignite, causing sparks or flames to harm people nearby or set surrounding property, such as a garage, vehicles or buildings on fire.

“We’ve seen an increasing frequency of claims, in general, where the finger is being pointed at the battery as the cause of the fire, or that a fire has been more intense because of the presence of a lithium-ion battery,” says Gallagher Claims Adviser, Brendan Main.

“As well as being more intense, a fire caused by a lithium-ion battery is often harder to extinguish, so the level of damage can be considerable. These battery fires also produce highly toxic fumes that are a hazard, so even undamaged property may need to be replaced. Due to those factors, the cost of claims as a result of these fires can be quite high.”

"In terms of electric vehicle claims, aside from the generic motor vehicle claims that we would expect with any vehicle, whether that's combustion or electric, we’ve seen growing evidence of a concern around fires caused by the charging of electric vehicles."

– Mark Taylorson, Gallagher Head of Specialisms

Other risks to consider

Mark Taylorson, Gallagher Head of Specialisms, explains implementing EV battery charger infrastructure calls for a risk management approach to planning and installation.

“Charging infrastructure safety is a concern as improperly installed or maintained EV charging stations can cause electrical hazards like shocks and short-circuiting. Even using chargers that aren't compatible with the EV model can pose risks. There are also emerging issues around battery degradation, cyber threats, including hacking of the charging station to access data or install malware and environmental risk,” comments Mark.

“Compliance and regulation, proper installation, regular maintenance, education and training, monitoring and surveillance, and an emergency response plan are all factors to be considered when establishing an electric vehicle charger.”

How Gallagher can help

Our experts can help you understand the risks associated with EV charging and determine whether you have the appropriate insurance coverage and limits so that you can face your future with confidence. 

Contact a Gallagher broker