The Challenges of EV Charging & Battery Storage with Buildings Insurance
As the adoption of electric vehicles (EVs) and battery storage systems continues to grow, these innovations bring significant benefits to energy efficiency and sustainability. However, they also introduce unique challenges for property owners and insurers. From fire risks associated with lithium-ion batteries to the regulatory complexities of integrating charging infrastructure, the impact of EVs and battery storage on buildings insurance is a critical area of concern.
Understanding the Risks
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Fire Risks:
Lithium-ion batteries, commonly used in EVs and energy storage systems, present a higher fire risk compared to conventional fuels or other battery technologies. According to the London Fire Brigade there was a fire from a Lithium battery purely from E-bikes or E-Scooters every two days in 2023 in London*. Aviva Insurance Company’s data shows a 7% increase in customer claims for fires started by lithium-ion batteries**. These fires can be challenging to extinguish and may cause significant damage to buildings. Insurers are increasingly factoring in the potential for thermal runaway incidents when assessing building insurance premiums.
Electrical Overload:
The addition of EV charging points and battery storage systems can strain electrical systems, particularly in older buildings not designed for high energy loads. Faulty installations or improper maintenance can lead to electrical fires, which further complicate insurance risk assessments.
Property Value Adjustments:
The presence of battery storage or EV infrastructure may impact property valuations. While such features can increase a property’s desirability, they may also lead to higher premiums due to the associated risks and maintenance requirements.
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Storage Regulations:
Correct installation and storage of battery systems are critical to minimising risks. Insurers may require compliance with specific safety standards, such as maintaining safe distances from living spaces and buildings, using fire-resistant enclosures, and ensuring appropriate ventilation. Non-compliance can lead to denied claims or higher premiums.
Challenges for Insurers
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Lack of Historical Data:
EVs and battery storage systems are relatively new technologies, and insurers have limited historical data to assess long-term risks accurately. This lack of precedent can lead to conservative underwriting practices, resulting in higher premiums or limited coverage options.
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Evolving Regulations:
Government policies and industry standards around EV and battery storage systems are constantly evolving. Insurers must stay up to date with these changes to ensure that their policies align with the latest safety and compliance requirements.
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Complex Claims Management:
Claims involving EVs or battery storage often require specialised expertise to assess damage, determine liability, and coordinate repairs. This complexity can increase costs for insurers and lead to longer claim resolution times for policyholders.
Mitigating the Risks
Professional Installation and Maintenance:
Ensuring that EV chargers and battery storage systems are installed and maintained by certified professionals is one of the most effective ways to minimise risks. A pro-active and professional approach will provide potential insurers with the comfort that you are aware of the risks and are managing them accordingly.
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Risk Assessments:
Property owners should conduct thorough risk assessments before integrating EV or battery storage infrastructure. This includes evaluating electrical capacity, ventilation, and fire safety measures. Proactive risk management can help reduce insurance costs and improve coverage options.
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Battery storage infrastructure:
Lithium-Ion storage is a key component to keeping your batteries in good health and your risk of battery related fires as low as possible. There are a number of approved internal & external battery charging solutions on the market that conform to the standards of both DIN EN 14470-1 and DIN EN 1363-1. It’s important that you discuss these with your insurance provider before purchase as they may suggest other adjustments that can be made to your premises such as re-purposing an external shipping container or building a dedicated battery charging and storage room with all the necessary safety infrastructure installed. Rigorous processes and procedures should be identified and put in place to ensure your business can handle faulty or non-operational batteries when they arise to that you can manage these situations carefully and correctly, these are the times where batteries can be mostly unpredictable.
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Specialised Insurance Products:
Insurers can offer tailored policies for properties with EV and battery storage systems, addressing the specific risks involved. Policyholders should seek out products that provide adequate coverage for potential damages, including fire, electrical issues, and liability concerns.
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Education and Awareness:
Educating property owners and tenants about the safe use and maintenance of EV and battery storage systems can significantly reduce risks. Collaboration between insurers, manufacturers, and regulatory bodies can support awareness campaigns and training programs.
Getting the best outcome with your Insurance Cover
In view of the complex nature of EV Charging and Battery Storage, it is advised to work with an Independent Insurance Broker. Brokers provide valuable advice on risk management and help ensure comprehensive coverage. They are able identify the most suitable insurers that are able to offer the insurance cover you need. You can find an Independent Broker at https://www.biba.org.uk/
Additional Risk Management Support:
Aviva Insurance Company have provided a useful guide to Risk Management here: https://www.aviva.co.uk/risksolutions/risk-management-guides/lithium-ion-risk-management/
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* https://www.london-fire.gov.uk/safety/lithium-batteries/
** Aviva internal data for fire claims with the word battery, batteries, charging, recharge, rechargeable, and charged. Compares data from Jan 2022 - Dec 2022 with Jan 2023 - Dec 2023.
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Authors:
Wayne Meek, RELM Logistics
Frank Hernandez, Meadow Broking Limited