In Australia, lithium-ion batteries have been thrust into the spotlight in recent weeks and months. Following a fire that destroyed a home, killing two people, in the Lake Macquarie region earlier this year, Fire & Rescue NSW commented that these were NSW’s first deaths from a “lithium-ion fire.” This month, fire authorities in Victoria said two university students were sleeping when a mobile phone power bank beside their bed exploded, quickly setting their bed alight.
Late last year, following a recommendation by the Australian Competition and Consumer Commission, the Federal Government issued a national product safety notice to warn consumers of fire risks associated with recalled LG solar lithium-ion batteries which are installed in solar energy systems across the country.
By 2026, the Australian Competition and Consumer Commission estimates that every Australian household will contain an average of 33 devices powered by lithium-ion batteries.
But according to Chris Bennett, head of motor, fusion & virtual claims at Crawford Australia, quite often lithium-ion batteries are the victim, not the villain.
“The reality is that burnt out lithium-ion batteries are found within most fire scenes today, not because they are necessarily the cause of the fire, but because lithium-ion batteries are found in almost every Australian home,” he explained.
These types of batteries power everyday items including mobile phones, electric vehicles, smart watches and rechargeable power tools such as drills and garden blowers. Essentially, any item that is rechargeable contains, or is powered by, a lithium-ion battery.
Jon Stagg, senior general liability adjuster, agrees with Bennett: “In general, causation when it is linked to the batteries is more often linked to user error, mechanical damage and/or charging behaviour, with very few claims in Australia involving manufacturing defects in the battery cells themselves. But, we are seeing that the damage caused by a fire is exacerbated by the presence of lithium-ion batteries which become a secondary source of ignition.
“We hear the term ‘lithium-ion battery fire’ used a lot but it can be quite unhelpful because of the perception it creates; that terminology alludes to the fact that the battery started the fire, when in reality, the expert investigators find it very difficult to confirm if batteries are the cause, or simply present where another ignition source was primary.”
Bennett believes a balanced approach is required.
“The attention that lithium-ion batteries have been getting of late is good on the one hand as it brings into consciousness some of the issues we need to be alive to, and then as society we are better informed to make decisions about how to manage the risks. However, on the other hand, there’s a bit of alarmist commentary going on in Australia at the moment, and if that catches on, it’s not going to lead to good environmental outcomes which these batteries unquestionably help deliver through things like electric scooters and cars.”
Whether lithium-ion batteries are causing more fires or not, the prevalence and presence of lithium-ion batteries across our everyday lives poses several challenges for insurers.
“When the battery itself has been destroyed, including the related circuitry, there’s little material left to identify the primary cause of ignition and this can limit recovery opportunities for insurers due to the uncertainty,” Bennett explained.
“If we look at electric cars; they are very expensive to repair and there’s a couple of reasons for that. Firstly, there is limited supply of parts and qualified repairers. Secondly, repairers and manufacturers tend to err on the side of caution when determining what is repairable when they’re dealing with batteries and electronics and therefore, the repair comes at a very high cost,” he added.
Stagg believes underwriters and insurers would be well served to consider policy response.
“Rather than blanket exclusions for events linked to this activity, placing certain conditions on policies could be considered as a way for insurers to mitigate their risk. Things like having clear parameters around safe battery storge, as well as conditions to ensure people purchase traceable batteries from reputable sources and brands and adhere to manufacturers’ guidelines.”
Bennett believes that low quality batteries and home-made battery powered devices items like e-scooters are risky.
“Unfortunately, with the rise in popularity of products like e-scooters, the home-made scene is growing as a way for people to save money. There’s no doubt about it; these are complex mechanisms, so you absolutely want to be using traceable batteries from reputable brands.”
Both Stagg and Bennett would like to see the conversation associated with lithium-ion batteries shift.
“This tech has been around since the 1970s, but we are only now cottoning on and hearing more about the risks because there are more of these batteries around,” Bennett explained.
“It’s about respecting the technology and learning to live with it safely, while reducing the risks associated with it the best we can,”
he concluded.
