Insurance Update: Lithium-Ion Batteries and Fire

From electric vehicles to e-bikes to laptops, lithium-ion batteries are ever-present in our lives—and continually charging inside our buildings. Unfortunately, this convenience comes with risk: defective or misused lithium-ion batteries have led to fires in parking garages, maintenance areas and individual units, suites and offices. New York City alone has seen 800 fires caused by lithium-ion batteries since 2022, making them the third leading cause of fires in the city.

For property owners, lithium-ion batteries are a major risk that can’t be ignored. Understanding the risks, establishing safety protocols, educating occupants and working with insurers and fire prevention experts are essential steps in mitigating risk.

The risks of lithium-ion batteries

The challenge with lithium-ion batteries is a phenomenon called “thermal runaway,” in which the cell enters an uncontrollable, self-heating state. Often, batteries that are damaged, overcharged, exposed to high temperatures, or have been disposed of improperly and can result in fires that can reach 1,800 degrees. 

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The danger goes well beyond the equipment itself. EV fires in parking garages threaten other vehicles. A battery fire in the bike room could easily spread before it’s noticed. A single overcharged battery stored in a corrugated carton can result in a fire that can quickly engulf an entire facility.

What’s more, it is extremely difficult to extinguish a fire involving lithium-ion batteries. In fact, fire departments are introducing specialized training and tactics specifically focused on lithium-ion battery fires, especially in EVs.

How property owners can manage battery risk

Like many new technologies, regulations and rigorous testing are making lithium-ion batteries safer. There remains, however, a lack of awareness and a need for education. For instance, property owners often don’t have emergency plans for lithium-ion battery fires. 

Banning EVs and lithium-ion batteries isn’t realistic or practical for most property owners. Instead, owners and managers should minimize fire risk through proactive management and education. Here are a number of risk mitigation strategies:

• Update parking garages: Parking facilities with chargers should leave proper space between electric and other vehicles to reduce the spread of fires. In addition, sprinkler systems are essential to pre-wet other cars to keep the fire contained.

• Ensure proper storage: Industrial and commercial spaces where lithium-ion batteries are stored also need sprinkler systems to stop the spread. Pre-wetting corrugated cartons can limit the fire from engulfing the area. Also, batteries in storage should be charged at less than 60 percent of capacity. They are far less likely to cause damaging fires than fully charged batteries.

• Establish safe charging areas: It’s impossible to prevent tenants and building occupants from charging batteries, but setting up charging stations for bike and scooter batteries in safe areas can help reduce risk. 

• Educate occupants: Lithium-ion batteries are so prevalent in day-to-day life that many people simply don’t know about the dangers they may hold. Educate tenants and occupants about safe battery use and disposal, including not using damaged batteries, not overcharging, and only using chargers and cords that come with the device. Organizations like FEMA and the National Fire Protection Association have printable flyers with safety tips and best practices.

• Establish rules for disposal: Ensure tenants and occupants understand proper battery disposal requirements and that batteries shouldn’t be thrown in the regular trash. You may even consider hosting a collection day to motivate occupants to recycle their batteries safely.

• Prepare for fires: Formulate emergency procedures in case of lithium-ion battery fires. Your local fire department can often assist. 

• Consider certification requirements: Many municipalities now require batteries sold within city limits to be tested and have safety certification from a nationally recognized testing laboratory. Property owners should consider requiring the same.

Work with your broker

Along with the outright dangers to person and property, the rise in battery fires is leading to increased scrutiny and even, in some cases, higher premiums. As you’re establishing safety protocols, connect with your insurance broker to discuss additional risk mitigation strategies and determine if your coverage adequately covers lithium-ion fire risks in your buildings.

The use of lithium-ion batteries is only going to grow. Take proactive steps now to help reduce the risks to your property.

Mike McBride is the property risk control practice leader for the HUB Risk Services Division.