Lithium-Ion Battery Storage

Why it matters for underwriting

Lithium-ion cells can enter thermal runaway from mechanical damage, overcharging or manufacturing defects, releasing flammable gas and burning at temperatures and speeds that conventional sprinkler systems struggle to control, with a strong tendency for a single failing cell to propagate to neighbouring cells and packs. Underwriters need to know whether batteries are stored or charged in quantity because this hazard is materially different from ordinary combustible storage and is increasingly excluded or sublimited under standard property wordings unless specific protection is in place.

Capturing the attribute and evidence

Proposal forms ask a straightforward yes/no question on whether lithium-ion batteries or battery-powered equipment such as e-bikes, forklifts, power tools or consumer electronics are stored or charged on site in more than incidental quantities. A positive answer is followed up with the layout of storage and charging areas, a dedicated fire risk assessment for battery handling, and the procedure for identifying, isolating and disposing of damaged or swollen cells; underwriters increasingly require this information given the rising claims frequency associated with e-mobility charging.

Effect on coverage, premium and conditions

Where charging is confined to a fire-separated area with appropriate detection and suppression, and damaged-cell procedures are in place, cover can typically be maintained with a moderate premium loading. Uncontrolled storage or charging near escape routes or combustible materials commonly triggers sublimits specific to battery-related fire, mandatory segregation or detection conditions, or exclusion of losses arising from lithium-ion battery failure until protection is upgraded.

Mitigation measures

Recommended measures include charging batteries only in a dedicated, fire-separated area away from escape routes and other combustibles, using charging equipment with overcharge and temperature protection, installing early-warning detection suited to battery fires, and establishing a clear procedure for quarantining and safely disposing of damaged or swollen cells.