Electric Vehicles: How to Navigate Heightened Risks and Insurance Challenges

SEPTEMBER 3, 2024

As electric vehicles (EVs) and charging stations become more prevalent, organizations that use them face increasing risks. News headlines about EV fires, which can be especially dangerous and hard to extinguish due to the vehicles’ lithium-ion batteries, are common. Because the technology is relatively new, its dangers and related safety measures are still evolving — as are the insurance considerations for property owners and other organizations.

Further complicating this issue are various laws and regulations that require organizations to install a certain number of charging stations for EVs. These regulations are often driven by national, state, or local governments that aim to promote the adoption of EVs and support the necessary infrastructure. However, insurance coverage for EVs can sometimes present challenges that seemingly contradict these efforts. Carriers may perceive EV charging stations as a significant fire risk and charge higher premiums, require special safety measures, and deny or limit coverage.

To help you navigate these challenges, USI has compiled resources that merge industry standards with actionable guidance. These tools can help you effectively manage the complexities and emerging risks of these modern vehicles:

Impact on Insurance Coverage and Costs

Due to the perceived increase in risks associated with EVs, insurance companies might impose the following:

  • Limited coverage — Insurers might restrict or limit coverage for properties with EV charging stations, either excluding them from policies or offering only limited protection.
  • Higher premiums — To mitigate the perceived risks, insurance companies may charge higher premiums for properties that install EV charging stations. This can significantly increase an organization’s operational costs.
  • Special conditions — Insurers may impose specific conditions or require additional safety measures, such as enhanced fire suppression systems, which can further increase costs.

Organizations and their insurance brokers should collaborate with carriers to assess both current and future protective measures for modern vehicle-related risks to maintain the continuity of their insurance programs. This process ensures that all safety controls receive proper credit and comply with the unique underwriting standards of each carrier.

How USI Can Help

USI Insurance Services takes a truly integrated approach to helping our clients reduce losses. Our property analytics and placement professionals collaborate with our own risk control team as well as insurers, their risk control teams, and/or third-party risk control. Together, we evaluate the impact of installing EV charging stations in designated areas prior to installation. Any impacts on premium, insurability, capacity, coverage, limits, or deductibles are explored and discussed with the insured, along with potential alternatives.    

USI’s proprietary PATH™ tool can also help clients navigate this challenge. PATH™ is a cutting-edge technology platform designed to address gaps in clients’ risk management programs through a guided, analytics-driven experience that pairs risk management solutions with individual loss drivers to enable a streamlined, cost-effective decision-making process.

For more information on navigating today’s EV-related risk and insurance challenges, please contact your USI representative or email pcinquries@usi.com.