Electric vehicle fires are on the rise; is there a risk to your business premises?
By Alan Boswell Group
There has been a steep increase in the number of electric-vehicle fires in recent years, drawing attention to the risks associated with electric vehicles (EVs) as they increase in popularity.
This spike in incidents doesn’t necessarily mean that EVs are getting less safe, though, and much of this increase could simply be down to the fact that there are more electric vehicles around. Statistics show that electric car sales increased by 40% in 2022, and this trend looks set to continue across the board as the Government has set emission targets which state that all new vehicle sales (including HGVs) must be zero-emission within the next 20 years.
But, the prevalence of EVs acts as a reminder to consider the associated risks as well as the insurance implications if you have charging points on your premises, either for your own commercial vehicles, or those of your customers, and employees.
What are the risks when charging electric vehicles on-site?
Broadly speaking, the risks of charging EVs on-site fall into three main categories – fire risk, liability risk, and cyber risk.
As the increase in electric-vehicle fires has shown, lithium batteries pose a fire risk, which can spread quickly and emit harmful toxins.
As well as destroying a vehicle, a fire poses a risk to your wider premises, property, and personnel. This is particularly true if vehicles are left to charge overnight unattended, where a fire could very quickly spread to other vehicles and your buildings if there is no-one around to keep an eye on things and raise the alarm at the earliest opportunity.
As the provider of a charging point, you will also need to be aware of your liabilities to third-parties and their property. For example, if a damaged charging point results in a fire that destroys a customer’s or a colleague’s car, it’s crucial that your insurance policy covers you for any resulting liability. Similarly, if someone hurts themselves after tripping over a charging cable, you will want to be sure that your insurance covers any resulting liability.
There is also the threat of cyber-crime associated with the charging technology and electric vehicles themselves. Software, data processing, and Artificial Intelligence (AI) play an ever-increasing role, so there’s a risk of it being hacked or even held to ransom if you don’t take necessary precautions.
You will also need to consider the security risks associated with having charging points on-site. Vandalism and theft of cables is on the increase, so it’s best to factor this into your insurance requirements and also the positioning of charging points.
What are the insurance implications?
Whatever modifications you make to your premises, it’s important that your insurance cover remains suitable, and your policy will need to take into account all of the risks mentioned above if you want to ensure you’re comprehensively covered.
Your insurer is likely to have their own set of requirements if they are to provide cover; they may want to inspect your premises, have specific requirements for the location of charging points, require a risk assessment to be undertaken, and they’re very unlikely to allow overnight charging if the premises is unmanned.
If you do not already have EV charging points, but are considering installing them, we would strongly recommend you speak to your broker or insurer before doing any work. Doing so will ensure you can take into account any of the insurer’s requirements from the outset, rather than having to make retrospective changes, which could be costly.
If you lease the property you should check with the landlord that you’re allowed to install charging points, and if there are any restrictions on when you can charge vehicles, as part of the lease. If you are a commercial property landlord, make sure your tenants know what they can and can’t do without your specific permission – and if they do intend to install charging points, emphasise the fact they need to speak to their insurance broker or provider first.
What can you do to manage the risk?
If you are installing charging points – either for your customers or for your business’s own fleet of vehicles – your first port of call should be your broker or insurer. Aside from any requirements they may have, there are some practical things you can do as a starter:
Where you position the charging points is key. For example, if you have an open space available away from any buildings, that might prove to be a safer option than installing charging points underground, or close to the building.
Make sure you have fire detection measures in place and fire extinguishers.
Ensure that cables won’t cause a trip hazard, and make sure that points are easily accessible.
The charging points should be installed by trained and qualified engineers, and you’ll need to ensure that regular inspections take place as part of your scheduled maintenance checks. Make sure you have security in place – CCTV coverage is advisable, and you could install lockable barriers for when the charging points are not in use, for example.
Speak to your broker or insurer
Charging electric vehicles on-site brings a series of risks. These can often be managed easily, but they remain risks nevertheless. Whether you already have charging points on-site, or you plan to install them, you should advise your broker or insurer. There are several reasons for this;
First, as the risk around your business changes or increases, your insurer will need to be confident that there are steps in place to manage the risk, and that your insurance policy reflects this. Failure to inform your insurer that you have, or are considering installing, EV charging points, could lead to a claim being declined due to non-disclosure of an increased risk. You will also want to be sure that your sum insured reflects the cost associated with replacing the charging points should an insurable event (fire, for example) occurs.
It's also likely that your insurer will have certain requirements they expect you to meet.
Finally, your insurer might have experience of other businesses going down a similar route and might be able to offer you pointers that will help you make a success of your plans.
If you’d like to discuss this further, please get in touch with your broker, or contact us on 01603 218000.
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