Risks presented by lithium batteries in strata buildings
Lithium batteries are widely regarded as the future of electric vehicles. Over 100,000 electric bikes and scooters powered by lithium batteries are sold annually in Australia. Between January and July 2023, 114 lithium-ion battery fires occurred, most notably an incident at a King’s Cross hostel which forced 70 people to flee the building and resulted in minor injuries.
As a result of this trend and with concern for public safety, inspections were carried out of lithium-ion battery retailers across the state. The New South Wales Department of Fair Trading identified 30 models that were non-compliant and removed from sale.
Risk also exists with compliant models particularly if they are stored or handled incorrectly. Situations of lithium-ion batteries catching fire include:
- Overcharging or use of non-compliant charging equipment.
- Overheating or exposure to heat or extreme temperatures.
- Product damage and deterioration (resultant from accidental piercing, vibrations, dropping, crushing etc).
- Short-circuiting, system faults or battery cell malfunctions.
- Defects or contamination caused during manufacture.
Insurance industry responses
Insurers have experienced a surge in claims resulting from lithium-ion battery related fires.
Allianz has reported a 440 per cent increase in claims for lithium-ion battery fires since 2020.
Given the trend insurers are looking closely at premises where e-batteries are used or stored. As regards commercial and residential property insurance, detailed disclosure of lithium-ion batteries on site forms part of the underwriting information required by insurers.
In line with disclosure obligations required of policyholders, insurers should be apprised of the existence of, and any policies, procedure and risk management strategies to mitigate against this loss trend.
The industry is also being proactive: some strata insurers are educating strata committees and residents outlining safe habits to adopt when using and storing lithium-ion batteries. Summarily, some of the general safety observations are:
- Purchase only from reputable suppliers
- Check second hand devices carefully before purchase and use
- Only use chargers and cord supplied with the device and which meet Australian standards
- Never leave devices on charge while sleeping or when going out
- Never charge devices on soft surfaces such as beds, blankets or carpets
- Do not charge devices while they are hot or wet
- Do not place batteries where they may get hot (such as in the sun or a hot car)
- Do not charge devices in an escape area such as a doorway, hallway, or corridor. You could be trapped if there is a fire.
- Store batteries in a room with a consistent temperature between 10-27 °C
- Store batteries at 30-50% charge level
- Protect batteries from physical damage
- Consider using specially designed lithium-ion battery storage cabinets.
- Stop using immediately if you notice overheating, bulging, leaking or unusual sounds
- Call 000 immediately if you see smoke, flames or smell/see vapours
- Many fires start in bins, rubbish chutes and waste disposal areas – never throw lithium-ion batteries in your regular waste or collection bins.
Strata committee responses
Some strata committees are moving towards banning electric bikes and scooters from their buildings. The Owners Corporation Network has already proposed that e-bike and e-scooter owners should not be allowed to charge batteries inside their apartments. A strata complex in North Sydney has already taken those steps and has banned e-bikes and e-scooters from their apartments. However, there have been mixed responses by residents, with some saying that bans should be more specific based on the make and model of the battery. Many others believe blanket bans are over-cautious and unfairly restrict the freedom and privacy of strata residents.
Bellrock’s approach is to avoid blanket decisions in favour of a responsible approach that best responds to the needs of each strata community.
Our strata risk advisors advocate for educating committees on risk and developing appropriate risk management strategies tailored to the unique needs and circumstances of each strata building. We do not profess there is a single approach to take across each building.
Regulation
There has been an increasing demand by industry stakeholders for state and federal governments to introduce regulations that govern the type of batteries that can be used in electric bikes and scooters, as well as more informative frameworks and educational tools about how to store and maintain lithium batteries.
In October 2023 the Australian Competition and Consumer Commission (ACCC) released its first report on lithium-ion batteries and consumer product safety. Though no formal regulatory framework has yet emerged, given the rise in incidents and growing media attention to this issue we expect the regulatory landscape will continue to evolve.
For advice on fire safety issues and their impacts on property insurance, contact us via the form below.
