25 November 2024
EV Charging Installations: Identifying and Managing the Risks
The Gallagher Specialty Construction team arranges specialist insurance for construction companies and large projects, including customised risk-management solutions for the ever-expanding electric vehicle (EV) sector.
As more and more EVs take to the road, the number of charging stations is also growing apace. While these installations are crucial to support the transition to sustainable transportation, their proliferation brings into play complex risks and hazards.
Incidents of lithium-ion battery-related fires are increasing globally, leading to physical damage and personal loss. In particular, the severity of such fires - and a phenomenon known as thermal runaway - can potentially cause devastating losses
The importance of specialist insurance advice
The risks associated with EVs, their associated charging infrastructure and battery storage are not as well understood as those associated with internal combustion engines. While guidance is available to those designing, installing or operating EV charging infrastructure, it is neither independent nor certified as ‘industry best practice’. Therefore, it cannot be relied upon as a defence in the event of an incident or claim.
Coverage
The current media interest in EV risk tends to focus on evidence that lithium-ion battery fires occur less frequently than fires in hybrid, diesel or petrol vehicles. However, frequency is just one aspect of risk. It is important to consider a vehicle fire's impact on public safety, the environment and surrounding assets.
The severity of EV fires can be much greater. Indeed, such fires have revealed the speed, intensity, characteristics and consequences of lithium-ion battery-related fires, drawing attention to the need to consider mitigation measures before, during and after an event.
EV infrastructure surveys, undertaken by EV-EXBOX, include the following risks and risk mitigation measures:
• Detection
• Emission of toxic gases
• Vapour cloud explosion
• Fire spread within a facility
• Fire spread beyond a facility
• Public safety
• Emergency services access
• Firewater pollution management above and below ground
• Staff awareness and training
Understanding these issues can help stakeholders, including policymakers, contractors and developers, mitigate potential dangers and enhance the safety of EV charging infrastructure.
What are the common issues?
Although EV fires are infrequent at present, dealing with them is challenging, and the ramifications can be significant.
In a recent article, specialist insurance advisor OAMPS Hazardous Industries points out that the pressure to roll out increasing numbers of EV charging stations can mean that too little thought is given to their location and design.
To reduce costs, EV charging areas are sometimes positioned where it is most convenient (and cost-effective) to connect to existing incoming electrical feeds. This can be problematic: a fire could be catastrophic if your EV charging area is near (or even above!) emergency exit routes or sensitive or business-critical infrastructure.
Positioning an EV charging area at the perimeter of your site could avoid these problems, though new issues may arise. It is important to know whether combustible materials are stored in the immediate vicinity of a new charging point and how close these assets are to your charging station.
If a fire were to start at your EV charging point and spread to neighbouring property, you could be held liable for damages. If the adjoining site were to be industrial or commercial, losses could include consequential losses arising from the fire and compensation for injury or loss of life.
There is a concentration of risk in multi-storey or basement facilities. Since EVs take a lot of time to charge, owners tend to leave their vehicles unattended while charging, increasing the likelihood that warning signs will go unnoticed.
In 2023, the government published interim guidance for installing charging points in covered car parks. Developed by Arup for the Department for Transport, it recognises that EV battery fires have unique characteristics. This includes the risk of reignition and compressed gas venting, which can result in flash fires or directional jet flames if fires occur in confined spaces.
Run-off from firefighting foam
Consideration should also be given to water run-off from attempts to control the fire. An EV battery fire is exothermic, producing toxic and flammable gases. It cannot be extinguished until the battery has either run out of stored energy or can be cooled enough to slow down or stop the thermal runaway process.
Often, this will require significant volumes of water that will absorb many of the toxic pollutants discharged during a fire. EV blazes require significantly more water and have a much longer extinguishing time (36-60 minutes on average) than fires on conventional combustion engine vehicles.
Dealing with the consequences of a pollution event can be expensive. Statutory clean-up costs can be significant if the run-off reaches watercourses, water tables or the surface-water drainage system.
Insurance and Avoidance
Can you avoid these risks?
The short answer is no. In most cases, fires in EVs occur because of damaged or defective batteries, with particular concern around the growing trade in second-hand EVs. The used EV market is estimated to have grown to nearly $1.8 billion globally last year and is set to rise to $4 billion by 2033.
However, the risk can be mitigated by careful consideration of the positioning of charging stations and protections in place to minimise the likelihood of a fire causing catastrophic property damage, pollution or injury.
Who might be at fault?
Site owners/operators and the contractors involved in the design and construction of the installation could be held responsible.
For example, if the site owner/operator provides the design brief to the contractor on the positioning of the charging area, any property losses or physical injury claims arising from this positioning would likely rest with them.
However, if the contractor makes any changes to that brief, they could be incorporated into the claim.
Where the contractor is responsible for the site's design, they and the site/owner operator would be the subjects of any subsequent legal action.
Will my insurance policy cover me?
As is often the case, the answer is ‘it depends’.
Insurers for the site owners/operators might take the view that positioning an EV charging area close to business-critical areas or combustible materials was negligent and that by doing so, the policyholder failed to mitigate their exposure. If the same insurers had not been told about the installations, then any claim resulting from the installation could have been declined.
Unless the insured has cover for own-site pollution clean-up costs, the costs of remediating their own site would not be covered. Depending on the wording of the pollution cover, the policy might not even deal with any third-party pollution damage.
The word ‘unexpected’ is common in many UK pollution cover documents. It might be argued that if suitable precautions had not been taken (for example, failing to place bunds or other drainage protections around an area that would leach toxic pollutants in the event of a fire), the pollution could hardly be considered unexpected.
Contractors who assume responsibility for the design risks could also find themselves involved in claims where the positioning of the charging area has either led to or exacerbated any losses or personal injury, or indeed, if they have suggested moving the area to make the installation project easier and/or cheaper to deliver.
Contractors could also have issues with their own insurance cover if they have completed an installation despite voicing their professional concerns about the design or location of the charging area. The insurance challenge is amplified if the contractor has delivered multiple iterations of the site design and is consequently required to carry out remedial works to sites without damage.
Reduce your exposure to lithium-ion battery fires
To ensure your interests are protected, a site-specific risk assessment is essential to identify risks and set out steps to remove or reduce them. The best way to achieve this is by engaging with experienced professionals who will consider the unique characteristics of lithium-ion battery fires when designing and choosing a location for EV charging stations.
Let's talk
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