I recently wrote about our local electric company’s offer to help pay for solar-powered homes where I addressed the obvious costs of the public utility covering these costs and whether they are coming out of the pockets of users who remain hooked to the power lines.
A law school classmate got me to put on my thinking cap and look at the insurance angle, plus other concerns. Blame my good friend Tom Trezise for this rambling trundle for the idea (but not the content).
Solar panels with lithium-ion battery storage promise energy independence, but they come with significant risks. Many of these risks are making insurers reconsider coverage or demand steep premiums.
These insurance risks are, in addition to the costs of disposal, repair, alterations to your home, security from vandalism, etc.
And what about the dangers and risks to first responders (firemen and EMTs) arriving at a home fire caused by the lithium-ion batteries.
Will local governments assess a fee for these risks to the specific homeowner for the added cost of specialized equipment to handle these scorching and toxic fires?
And why should those property owners who are not solar-powered be required to bear the risks and fees?
What about the dangers and risks to adjacent property owners, be they residential or commercial?
Could you consider whether your current coverage includes the risk? If not, what would be the cost of an additional rider for property damage? Liability coverage for harm and property damage to others?
Rechargeable lithium-ion batteries in e-bikes, scooters, and electric cars pose serious fire risks, burning hotter and longer than typical fires. Many fire departments are unprepared, as seen in a New York City fire that killed four. Battery-related fires are increasing in major cities, with over 200 incidents in New York last year alone. Unregulated aftermarket chargers and overcharging are vital factors, leading to malfunctions, overheating, and significant property damage. (Source: CBS News Report).
Here’s a closer look at the potential insurer concerns:
1. Thermal Runaway: The Unstoppable Chain Reaction
Lithium-ion batteries can overheat and trigger a self-sustaining chemical reaction, leading to fires or explosions. Once started, these fires are nearly impossible to extinguish due to the battery’s internal oxygen generation.
Insurance Impact: The high risk of severe fire damage forces insurers to require expensive fire suppression systems, driving up premiums or denying coverage altogether.
2. Toxic Gas Emissions: Hidden Dangers in the Air
When a battery fire occurs, toxic gases like hydrogen fluoride and carbon monoxide release, posing severe health risks to anyone nearby and complicating firefighting efforts.
Insurance Impact: Increased liability concerns push insurers to impose strict safety measures, like enhanced ventilation, making coverage more costly.
3. Explosion Hazard: High Energy, High Risk
If a lithium-ion battery fails, the dense energy stored in it can result in powerful explosions, posing a significant threat to homes and nearby structures.
Insurance Impact: Explosions’ unpredictable nature leads to costly property damage and business interruption claims, requiring insurers to demand blast-proof designs and extensive safety assessments.
4. Environmental Contamination: Toxic Legacy
When battery fires release chemicals like lithium and cobalt, they can contaminate soil and groundwater, making environmental cleanup a complex and costly process.
Insurance Impact: Many policies limit or exclude environmental liability coverage, especially in regulated areas, pushing homeowners to invest in expensive containment systems.
5. Complex Fire Suppression Needs: More Than Just Water
Standard firefighting methods often fail against lithium battery fires, which require advanced systems like cooling units or chemical agents to control.
Insurance Impact: The high costs of specialized suppression systems add to the operational expenses, and insurers typically require these systems as a condition of coverage.
The Bottom Line
Solar power storage may seem like a great option, but the risks—thermal runaway, toxic gases, explosions, contamination, and complex suppression needs—make it a tough sell for insurers. To secure coverage, homeowners must invest in rigorous safety measures, advanced monitoring, and detailed risk management plans.
Sources: National Renewable Energy Laboratory (NREL), Allianz Global Corporate & Specialty (AGCS), Insurance Institute for Business & Home Safety (IBHS)