Lithium-ion battery fires: A rising risk in Australian households

Lithium-ion batteries can be found in all kinds of devices, appliances and even vehicles.

The batteries are certainly popular, but they also pose a fire risk. 

Powering everything from electric toothbrushes to electric cars – and many other devices and appliances in between – rechargeable lithium-ion batteries are a common feature in our everyday lives.

And their use is growing.

According to a McKinsey report, 27 per cent annual growth in the market globally is forecast for every year between now and 2030.

The ACCC estimates that Australian households will have an average of 33 items with lithium-ion batteries by 2026.

Their popularity is little wonder given the number of positives for lithium-ion batteries – they are lighter and smaller than other types of battery, they are rechargeable, have high energy density, are long-lasting and play an important role in the transition to net zero.  

But there is a downside. And it is a pretty big one – the batteries pose a fire risk.

Fire risk

Lithium-ion batteries cause fires every day in Australia, with state and territory fire services indicating that more than 1000 fires have been caused by the batteries over the past year.

Between 2020 and 2022, the ACCC saw a 92 per cent increase in reports of lithium-ion battery incidents. 

Also according to the ACCC, there were 231 product safety reports relating to lithium-ion batteries received between April 2017 and March 2023.

It recorded 24 product recalls affecting an estimated 89,000 products between January 2017 and December 2022.

Of those product recalls, 20 were due to fire risk from overheating or short-circuiting.

Fires caused by lithium-ion battery failure can be incredibly destructive – causing explosions and releasing toxic gas – leading to property damage, serious injury and even death (earlier this year, two people died in a house blaze in NSW caused by a lithium-ion battery).

Lithium-ion battery fires can be sparked by a number of things, including overheating, using the wrong charger, damage (eg: from being dropped), being in an accident, or being exposed to high external temperatures. 

Lithium-ion battery fires are not easily contained and are self-sustaining (the lithium salts in the battery are self-oxidising, meaning that they cannot be ‘starved out’ like a traditional fire), which means they can cause extensive damage and loss.

Along with the property damage and loss comes an increasing number of insurance claims. 

Lithium-ion batteries at rentals

With mobile phones, laptops, tablets, power banks, headphones, smart watches, toys, torches, electric toothbrushes, vacuums, power tools and lawn mowers being powered by the batteries, tenants are recharging these items daily.

And the number of household fires being caused by recharging devices, particularly personal electronic devices, is growing.

According to fire services, incorrectly charging these devices, for example by not using a charger from the original manufacturer, charging the device in an inappropriate location (eg: on or near a bed or soft furnishings) or over-charging the device, is leading to the devices overheating and catching fire.   

With the growing use of these batteries in household goods and the surge in the uptake of EVs (cars) and other light EVs (e-bikes, e-scooters, e-mobility devices), more and more tenants will be storing, using and charging the batteries in rentals. 

This means there is a corresponding growing risk of fires occurring at investment properties. 

EV charging stations 

The uptake of EVs is also surging.

There are now more than 180,000 EVs on Australian roads, with 98,436 of those bought last year, according to the Australian Electric Vehicle Industry Recap 2023.

With this increase comes an increasing demand for EV charging facilities at rentals. 

While body corporates will no doubt be looking at installing EV charging stations within strata complexes, tenants may also be looking for the chargers to be available for use at houses, townhouses and so on.

Landlords will need to carefully consider whether they will install or allow the installation of EV charging points at their investment property.

Lithium-ion battery fires and insurance

Given the increasing number of lithium-ion battery fires, many property managers are asking whether damage caused by such a fire would be covered by the landlord’s insurance.

The answer is – it depends.

Basically, cover for the damage resulting from a lithium-ion battery fire is dependent on what caused the fire to occur. 

If a tenant or their appliance was to cause a fire, then generally the landlord would be able to make a claim for fire damage under their insurance.

However, if the fire was caused by faulty workmanship or negligence, then the claim may be impacted.

When it comes to EV chargers, it’s also a grey area.

Say, for example, it was found that the EV charging point wasn’t installed correctly, and this caused a fire.

In this case, the damage would not be covered as it was the result of faulty workmanship (which is a policy exclusion). Similarly, if there is negligence involved, the claim may be denied.

Because it isn’t straight forward, our EBM RentCover Claims Specialists would look at a claim on a case-by-case basis.   

Reducing the fire risk

To reduce the risk of fires being caused by the charging of lithium-ion powered devices, you (on behalf of your landlords) might like to provide tenants with some safety tips.

You can access these from the fire services website in your jurisdiction.

In addition to making sure that the rental is fitted with the requisite smoke detectors, you could also suggest the landlord provide fire blankets and a fire extinguisher (F-500 is the type needed to put out lithium-ion fires) at the property, and check that the tenants know how to use them.

Discuss with your landlords whether they want to enforce any ‘house rules’ in relation to EV and light EV charging, document this in the lease agreement and ensure tenants are aware of the rules.  

With goods powered by lithium-ion batteries on the rise, the associated fire risks are also on the up.

Insurance claims for damage from these types of fires are also set to increase, and insurers are considering their stance on coverage.

The Insurance Council of Australia notes that most insurance policies do not exclude fires cause by lithium-ion batteries, however this may change in the future.

For the time being, whether damage resulting from a lithium-ion battery fire is covered by insurance or not, depends on the cause of the fire.

If you have questions, please get in touch with your EBM RentCover Relationship Manager or call 1800 661 662.  

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