Managing risks in the age of rechargeable electronics

Incidents range from catastrophic building fires to major shipping losses. These events are not isolated; they are part of a growing trend that demands proactive risk management. Recent data from the LexisNexis^® Verdict & Settlement Analyzer underscores the urgency, with the average settlement for lithium-ion battery cases now exceeding $7.8 million.

Why are losses rising?

Lithium-ion batteries are powerful, but they are also sensitive. Common causes of loss include:

• Manufacturing defects that lead to overheating or short circuits.
• Improper handling during transport, increasing the risk of damage and ignition.
• Inadequate storage conditions, such as exposure to extreme temperatures.
• Counterfeit or substandard components entering the supply chain.

Each of these factors can turn a routine shipment or product launch into a multi-million-dollar liability.
 

Real-world lessons

Over the past several years, there has been a surge in lithium-ion battery fires:

• E-Bike Battery Explosion (NYC, 2025): An e-bike battery exploded inside a pizzeria, causing a building fire and resulting in a fatality. This tragedy highlights the dangers of improper charging practices and the need for consumer education and product safety standards.
• Tesla Charger Fire (Texas, 2025): A Tesla home charger malfunctioned, sparking a fire that destroyed a single-family dwelling. As electric vehicle (EV) adoption accelerates, this incident underscores the importance of certified installation and rigorous quality control for charging infrastructure.
• International Shipping Disaster (Alaska, 2025): A major shipping company banned EVs after a lithium-ion battery fire caused a cargo ship to capsize, leading to a staggering $335 million loss. This event demonstrates the global implications of battery risk and the urgent need for maritime-specific safety protocols.

Underwriting considerations

Insurers are closely watching the risks tied to lithium-ion batteries and rechargeable electronics. Underwriting decisions depend on whether companies have strong safety and quality controls in place such as:

• Quality checks during production;
• Safe packaging and shipping;
• Supplier compliance with safety standards; and
• Clear plans for recalls or product failures.

The pace of innovation and accessibility in the consumer electronics market is exciting, but it also introduces new liabilities. Companies that can demonstrate proactive controls, commitment to testing standards and transparency across their supply chain are not only reducing risk but positioning themselves for more favorable insurance terms and long-term resilience.

Loss control strategies

Risk mitigation starts with education and planning. Here are four practical steps businesses can take:

1. Implement strict testing protocols for all battery components.
2. Train staff on safe handling and storage practices.
3. Use certified carriers for transportation and monitor conditions in transit.
4. Develop a crisis response plan for potential battery-related incidents.

By prioritizing these measures, companies can reduce exposure and protect both their reputation and finances.
 

Protection for today’s risks

Rechargeable electronics are powering the future, but they come with complex risks that require vigilance. Manufacturers, distributors and retailers who invest in proactive risk management strategies will not only safeguard their operations but also build trust with customers and partners in an increasingly electrified world.