By Michael McBride, Property Risk Control Practice Leader for HUB International, and Jen Aitchison, North American Energy Co-Practice Leader

Lithium-ion batteries have attracted the attention of commercial property owners and operators, but not necessarily for good reasons.

Used in electric vehicles (EVs) ranging from delivery vans and automobiles to scooters and bikes, defective or misused lithium-ion batteries have resulted in tragic fires in residential and commercial properties. Often, batteries that are damaged or overcharged or have been disposed of improperly, such as discarding batteries in residential trash bins, can result in fires.

For property owners, lithium-ion batteries are a major risk they cannot ignore. These batteries are often charged inside apartments, interior hallways and residential parking lots, or stored in commercial and industrial spaces.

Banning EVs and lithium-ion batteries isn’t realistic or practical for most property owners. Instead, owners and managers should minimize fire risk while acknowledging tenant needs. Establishing safe charging areas, educating residents and working with insurers and fire prevention experts are essential steps in mitigating risk.

The challenges are complex

The increasing popularity of lithium-ion batteries and EVs does not match tenants' and property owners’ awareness of the dangers. Batteries that are defective, damaged or overcharged can cause fires that reach 1,800 degrees Fahrenheit instantaneously.

EV fires in parking garages threaten other vehicles. These garages are often old and lack sprinkler protection. There’s also the potential risk in warehousing: A single overcharged battery stored in corrugated cartons can result in a fire that can quickly engulf the entire facility.

Like many new technologies, lithium-ion batteries are getting safer, while regulations are catching up. There remains, however, a lack of awareness and a need for education. For instance, property owners often don’t have emergency plans for lithium-ion battery fires.

And since it is extremely difficult to extinguish a fire involving these batteries, some fire departments will not attempt to put out these blazes, instead focusing on containing the fire to reduce the risk of spreading or injury.

How can property owners reduce lithium-ion battery risk?

Property owners can take several steps to improve safety and reduce the risk of lithium-ion batteries located on site:

  • Parking facilities with chargers need extra space between EVs and other vehicles to help stop fires from spreading. In addition, sprinkler systems are essential to pre-wet other cars to keep the fire contained.
  • Industrial and commercial spaces where lithium-ion batteries are stored also need sprinkler systems to keep fires from spreading. Pre-wetting corrugated cartons can limit the fire from engulfing the area. Also, batteries in storage should be charged at less than 60% of capacity — they are far less likely to cause damaging fires than fully charged batteries.
  • Lithium-ion batteries being charged in residential units or retail locations present a serious challenge. Often, batteries are damaged, stored incorrectly or overcharged, leading to devastating fires. Property owners can ban charging in living units or shared common spaces, but that cannot always solve the problem. Instead, setting up charging stations in safe areas is essential to reduce risk.
  • Many municipalities now require that batteries sold within city limits must be tested and have safety certification from a nationally recognized testing laboratory. Property owners would do well to require the same.
  • Landlords must also formulate emergency procedures in case of lithium-ion battery fires, while educating tenants about the dangers and proper use of the batteries on their properties. Property owners need to establish rules about use and disposal, while communicating regularly with tenants about lithium-ion battery safety.

Ready to learn more? Start a conversation in the comments below or contact HUB's Real Estate Practice to help get valuations and premiums under control.