Article Post

Electric Vehicles and the Unique Risks Insurers Need to Consider

December 16, 2015 | By: Chris K. Panasiewicz

Many environmentally- and fuel-conscious consumers are driving, or considering the purchase of electric vehicles. In the long-term, they can help reduce the owner’s carbon footprint and save thousands of dollars on the ever-increasing (except for the recent year) costs of gasoline.

In order to successfully market electric vehicles, manufacturers need to make sure they can compete with gasolinepowered vehicles when it comes to mileage. While there may not be an expectation of a full charge lasting as long as a full tank, the difference is expected to be reasonable. To accomplish this, electric vehicles are being designed to be as light as possible, and come equipped with powerful rechargeable batteries.

Insurance companies need to consider the major risk factors of insuring these lightened electric vehicles, and ensure that premiums reflect that risk exposure. Compared to driving gas-powered vehicles, the risk of injury can be higher, and repairs and replacement parts can be very costly.

Insurers need to consider the research and recent history of electric vehicles, and understand the potential risks and unique expenses of insuring them.

1. Risk of “Thermal Runaway” 

Lithium-ion batteries are commonly used in electric vehicles because they offer the best mileage on a full charge compared to other rechargeable battery options. They are highly efficient in terms of energy stored relative to their weight, but they are also highly explosive.

If a lithium-ion battery is overheated or overcharged, it can experience a rupture and a failure called “thermal runaway”.Thermal runaway occurs when the increasing temperatures in the battery start releasing energy, which then generates heat and continues to increase the temperature of the battery. This uncontrolled process sometimes results in combustion, and lithium-ion batteries are especially susceptible to such a failure.

2. Risk of Fire on Impact

There have been at least four documented cases of fire following impacts associated with lithium-ion batteries in electric vehicles in the past few years. Notably:

  1. BYD e6 – Shenzhen, China (May 2012)1
  2. Tesla Model S – Washington, USA (October 2013)2
  3. Tesla Model S – Merida, Mexico (October 2013)3
  4. Tesla Model S – Tennessee, USA (November 2013)4

Both incidents in the U.S. were caused by the vehicles hitting or running over foreign objects or debris on the road. Following the second fire, Tesla adjusted the suspension of the Model S so it would not automatically lower itself as much at highway speeds, to reduce the chance of hitting objects on road. Something worth pointing out is changes to Tesla’s vehicles often take place through a software update, similar to an update you would get on your smartphone or laptop. This puts Tesla at a major advantage to other automotive manufacturers as it minimizes product recalls significantly. In the event there is a change in the vehicle that can be done via software, all they have to do is send out a software update notification, and problem (presumably) solved.

Read more in Chris’ article below:


Chris K. Panasiewicz, Consulting Forensic Engineer, M.Sc., P.Eng., CFEI

Specializing in fire and explosions investigations and electrical engineering, Chris is qualified as an expert witness in the Ontario Superior Court of Justice and has investigated over 300 forensic incidents to date. In addition to over 10 years of fire and explosions experience, Chris has over 20 years experience working as an electrical engineer in the field of high and low voltage motors, generators, transformers and electrical equipment failure mode investigations and analysis, including electrical components design, repair and testing methods