Allianz UK highlights EV battery fire risks for motor traders

Allianz warns motor traders of EV battery fire hazards

Allianz UK has advised motor traders to be aware of the risks associated with electric vehicle (EV) battery fires.

The insurer noted that lithium-ion batteries, used in EVs, present a fire hazard when damaged, improperly stored, or mishandled, leading to incidents with severe financial and structural consequences.

Research, including findings from Thatcham Research, indicates that EVs are generally less likely to catch fire than petrol or diesel vehicles.

However, when fires do occur, they can be more intense due to the nature of lithium-ion battery combustion.

Allianz has reported cases where battery-related fires have led to extensive property damage.

In two recent incidents, EV battery fires caused insurance claims exceeding £5 million and £1.5 million respectively.

Both incidents involved faulty batteries that had been removed from vehicles and were awaiting manufacturer collection.

Challenges posed by lithium-ion battery fires

Lithium-ion batteries can enter a state known as ‘thermal runaway’, where internal chemical reactions cause uncontrolled heat generation.

This can result in fires that are difficult to extinguish and may reignite days or weeks after the initial event.

Olivia Baker, head of motor trade at Allianz UK, commented: “The severity and financial impact of lithium-ion battery fires are considerable.

Due to the chemical reactions and toxic material that are left behind, these fires can render buildings beyond economical repair.

“Understanding the risks and implementing effective prevention and management strategies are crucial to safeguarding businesses and ensuring the safety of employees, though thankfully at the moment the total number of claims is relatively low.”

Risks beyond electric vehicle batteries

Allianz also noted that lithium-ion batteries in portable power tools can present a fire risk.

In one case, a tyre fitting centre experienced a fire resulting in a £250,000 claim after a power tool ignited while charging.

Motor traders handling EVs may face additional risks when dealing with vehicles subject to recalls, battery defects, or advisory notices.

Businesses with high vehicle turnover, such as repair centres and sales dealerships, could be particularly affected.

Franchised dealers and breakdown recovery services are also exposed to risks when diagnosing or transporting EVs with potential battery issues.

Recommendations for motor traders

Allianz advises motor traders to take several precautions to reduce the risk of lithium-ion battery fires.

The insurer recommends:

• Implementing thorough inspection protocols for damaged batteries.
• Ensuring safe storage and charging practices.
• Collaborating with insurers and brokers to improve risk prevention strategies.

Allianz provides risk management guidance to brokers and policyholders to help businesses reduce hazards associated with lithium-ion batteries.

Risks of lithium-ion battery fires in the motor trade sector: Summary

Allianz UK has warned motor traders about the risks associated with lithium-ion battery fires in electric vehicles.

The insurer highlighted that while EVs are less likely to catch fire than traditional vehicles, the intensity of battery fires presents challenges for businesses.

Two recent cases resulted in insurance claims exceeding £5 million and £1.5 million due to faulty batteries stored at motor trade premises.

Allianz also reported a £250,000 claim linked to a fire caused by a lithium-ion power tool battery.

Thermal runaway in lithium-ion batteries can lead to severe fires that are difficult to extinguish.

Allianz recommends that motor traders implement strict inspection, storage, and charging procedures.

The insurer provides risk management support to brokers and policyholders to mitigate these hazards.