The Insurance Council said it understands that research regarding the fire risk of EV charging is still in its early stages in Australia and globally but was able to outline the factors specific to EVs that insurers will consider in assessing claims .
The council was responding to an enquiry from GoAutoNews Premium about whether insurance premiums were being increased to cover for increased risk to buildings where electric vehicles fires might occur.
GoAutoNews Premium asked:
- Have insurers started adjusting premiums to account for the increased risk to homes (and other buildings) where EVs are garaged given the tendency for EVs to spontaneously combust (especially after accident damage) and considering the increase risk of total loss of the building because of the ferocity of the fire (ICE vehicle burn at 1500 deg celsius vs EV fires at 5000 deg celsius and take hours to extinguish)?
- Are apartment insurers looking at risk premiums for the same reason – especially in view of the intense heat from EV fires potentially compromising the structure of an apartment block?
- Are insurers looking at risk premiums for insurance of auto repair and service premises where damaged EVs are housed?
- Are insurers looking at risk premiums for commercial car parks?
A spokesperson from the Insurance Council of Australia told GoAutoNews Premium: “The Insurance Council does not collect data on changes to insurers pricing arrangements, and we are not aware of insurers adjusting pricing arrangements of any kind because of the reasons stated above.”
Image Source: evfiresafe.com
But the Council went on to explain what is in the minds of insurers when assessing premiums for EVs.
“Insurers will consider several factors when pricing an insurance premium for any car, but for an electric vehicle it may include the following factors:
- Electric vehicles particularly high-end brands such as Tesla are expensive vehicles to purchase
- The technology and parts in an electric vehicle are more expensive to produce and replace, specifically motor parts and battery
- Repairing damaged electric vehicles requires importing parts to Australia
- There are few electric vehicle service centres around Australia that can repair electric vehicles, vehicles may need to be transported to a distant location to be repaired
- Repairing electric vehicles requires specialty tradespeople, at present there are few of these trained people in Australia
- Dealing with damaged electric vehicle batteries is time and labour consuming. It also requires specialty equipment and disposal (recycling) methods.
Damian Chadwick, director of leading Australian auto insurance provider AWN Group and director AWN and CEO of Sovereign, told GoAutoNews Premium: “As with any new technology, it will take time and education to apply an adequate risk profile.
“While insurers have sophisticated actuarial tools to mitigate and price risk, claims history is our foundation.
“To my understanding, there are two common charging solutions. Straightforward plug-in to a standard outlet and charging units that require installation by an electrician, which allows for a much faster charge,” he said.
“While I think it is safe to say that lithium-ion batteries have the potential to be a fire hazard, it’s too early to understand the significance this will have on premiums for property owners.
“In speaking with our dealer network, this is not a current consideration for consumers considering an EV purchase.
“The motor industry has a vested interest in ensuring consumer confidence in the stability of EV products, and with the substantial advancements in battery technology, this (risk of fire) could become a moot point,” Mr Chadwick said.
The insurance issue also extends into the premises of repairers.
Damian Chadwick
The MTA of SA and NT chief executive Darrell Jacobs has said that strict new industry-approved EV repair guidelines are being required and with them, new levels of training and repair skills along with a different – and more stringent – set of safety guidelines.
He said that: “As second-hand EVs become more common, approved mechanics will also be able to advise potential buyers of the condition of the EV battery.
“Electric vehicles are different and it is important that motorists, automotive industry operators and our first responders are aware of the dangers and technology involved,” Mr Jacobs said.
In a GoAutoNews Premium article, the MTA of NSW also said that funding was needed for up to 50,000 automotive workers in NSW for upskilling and training in the safe servicing of EVs.
Meanwhile, in the US this week, CBS News published an article on lithium-ion battery fires including that they caused at least 20 deaths and more than 300 injuries in New York City and San Francisco since 2019.
But CBS News reported that specific numbers on EV fires are difficult to identify as the US National Fire Incident Reporting System (NFIRS) that is used by fire departments, doesn’t separate ICE car fires from those involving electrified vehicles.
In the US, EV fires are considered rare because EVs make up only about 1-2 per cent of all vehicles on the road. But the number of EVs is rising quickly.
Concerns about EV fires and the issue of the thermal runaway fire risk with lithium-ion battery vehicles – including cars, e-bikes and e-scooters – has led to US Democrat senator for New York, Kirsten Gillibrand to introduce a proposal for an act to set national consumer standards for rechargeable lithium-ion batteries.
EV fire risk has also shone the spotlight on an Australian organisation that hosts short online courses for businesses, people and locations working with lithium-ion batteries and EVs.
The organisation, EV FireSafe, offers lithium-ion battery and EV training for emergency responders and focuses on risks and challenges in dealing with thermal runaway incidents.
It said that the training courses are designed for responders including firefighters, police, roadside assistance organisations, road rescuers, paramedics, tow operators, road and tunnel operators and emergency managers.
Image Source: evfiresafe.com
The private organisation has seed funding from the Australian Department of Defence to research EV high-voltage battery fires and emergency response, particularly where the EV is connected to energised charging.
It also provides an overview breakdown of verified EV battery fires that allows comparisons on cause, circumstance, ignition, vapour cloud explosion and connection to charging.
EV FireSafe research finds that electric-powered road-registered EVs (passenger cars, trucks and buses) are less risky than other Light EV e-mobility vehicles (e-scooters, e-bikes etc) because of higher quality batteries and an open charging environment.
EV FireSafe said that road registered EVs had very high quality lithium-ion batteries encased in protective battery-pack casing. These EVs typically had low wear and tear and were charged and operated in open spaces where there was a lower risk to life and property safety.
In contrast, Light EVs (e-scooters, e-bikes) generally had low quality lithium-ion batteries, were exposed to high wear and tear, and were typically charged inside homes which had a much higher risk to life and property safety.
In Australia, the United Firefighters Union Australia (UFUA) went public earlier this year saying the Australian government must introduce regulation and public education campaigns for EVs and battery energy storage systems (BESS).
UFUA national secretary Greg McConville told the ABC that the union welcomed the growing use of EVs and BESSs to reduce harmful climate emissions.
However, he said the technologies posed unique hazards that authorities must address.
“New EV sales within Australia increased by 65 per cent in 2022, and with the rapidly increasing take-up of these, and BESSs, the issues are growing exponentially,” he said in an interview with the ABC.
“When the integrity of lithium-ion batteries is compromised, the energy they store is released as heat, known as ‘thermal runaway’.
“There’s no greater likelihood of an EV fire than a combustion-engine car fire, but when they happen the risks are huge and the consequences are enormous.”
Read more:
Regulation call for EV fire risk
By John Mellor
