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As the world moves to cleaner energy alternatives such as electric vehicles (EV’s), a not so obvious question lurks: do electric vehicles come with environmental risks? Of course. There are no free lunches, after all. In this article we’ll take a quick look at some of the current risks and their insurance implications.
Commercial real estate owners have been under pressure by electric vehicle manufacturers, power companies, municipalities, competition, and customers to add charging stations to accommodate the use of electric vehicles. Under personal and commercial auto policies, however, environmental or pollution coverages may be limited based upon coverage limits selected or excluded under Damage to Someone Else’s Property.
So, what happens when an electric vehicle catches fire on your site while using one of your charging stations? What if there is an accident in one of your parking lots or garages involving an electric vehicle? What is the impact on your site or neighboring sites? What are the financial implications? Do the profits of a charging stations outweigh the cost of remediation in the unexpected event of an electric vehicle fire on your site?
In Massachusetts, it took two plus hours and over 20,000 gallons of water to extinguish a fire from a single car crash. Damage to the lithium-ion undercarriage of the vehicle was described by the local fire department as a thermal runaway causing the vehicle to become a fully involved fire. EV fires can burn at around 5,000 degrees and make it difficult to extinguish.
Think of the impacts of 20,000 gallons of contaminated water going into storm basins, wetlands, buildings and garages, and the clean-up costs associated with the event or if firefighting foam containing Perfluoroalkyl and Polyfluoroalkyl (PFAS) substances.
And electric vehicle fires do not just release smoke. They release gases such as carbon monoxide, hydrogen chloride and hydrogen fluoride causing possible bodily injury and property damage. If a real estate owner sends the damaged vehicle to a hazardous waste facility, and in time the facility has an environmental issue, the real estate owner could become a potential responsible party through strict, joint and several liability.
It’s also entirely possible that the owner of the vehicle would not have the financial wherewithal to address the myriad remediation costs if brought into a regulatory action. As a real estate owner. in many cases you may be found not responsible but ultimately incur very costly defense expenses.
To be clear, this is not a debate about whether you think electric vehicles are the future or not. Rather, it is a question about risk management strategies. If an EV has a fire or environmental release on your site and the owner of the vehicle doesn’t have the financial ability to cover a loss due to insurance limitations, who bears the cost? As a real estate owner, you could potentially become the deep pockets for remediation costs or toxic tort claims.
EV fires like the one noted above are taking place every day in just the United States alone – stemming from charging failure issues to flooding from storms, automobile accidents and electric shock to name a few.
Environmental insurance products are a cost-effective way of mitigating long-term environmental liabilities. For additional information on how to take measures to mitigate environmental liability risks, please contact the Risk Strategies Environmental Practice.