Fires caused by lithium batteries: how to insure efficiently ?

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Publié le 11/02/2025 par Jérôme Goy

INSURANCE LAW

Fires and damage involving lithium batteries are so numerous that they cannot be ignored by insurers or policyholders alike. For example, on October 31, 2024, a lithium battery fire destroyed one of the world’s largest battery recycling plants in Missouri (USA) (1), just a few months after a 900-ton lithium battery fire in Aveyron (France) (2).

In the wake of these repeated incidents, the focus has turned to insurers. How to cover such a risk? France assureurs and Assurance Prévention have commissioned CNPP to carry out fire tests on lithium batteries, with the aim of setting up a prevention system (3).

In the absence of established contractual clauses or practices, and in the absence of precedent, here are a few useful reminders for insured companies:

1. If the insurer or lender is unaware that your company’s activity is related to lithium, they may be tempted to point to the existence of gross negligence, thereby defeating the waiver of recourse clauses (very common in commercial leases) (4) and seeking to reduce the indemnity paid by the insurer (5).
2. Since employers are responsible for the safety of their employees (6), the insurer may sometimes make indemnity conditional on the implementation of prevention and safety mechanisms (safety cabinets, training, etc.) (7).
3. Beware of forfeiture clauses used by insurers to exclude compensation (formal requirements, declaration of storage of lithium batteries and goods, etc.) (8).