Everywhere all at once: The emergence of EV chargers and risk management considerations

The future is almost here — by the end of the decade, electric vehicle (EV) charging stations will outnumber gas stations. Billions of dollars are about to be spent on EV charging infrastructure, and that’s going to create hundreds of thousands of US business partners in the journey to a net zero economy.¹ The property and casualty insurance industry has an important role to play in encouraging this transition. Any business that owns or rents commercial real estate with parking infrastructure — an office, a retailer, park, gym, or university — will be impacted by the growing need for publicly available EV chargers. This shift will become crucial for businesses as end-users will base their shopping experience on the accessibility of chargers.

Nevertheless, it’s important to join the charging club with eyes wide open — to embrace the opportunities they present as well as be prepared for new overhead and risk management considerations. Planning for these new exposures and implementing best practices will help mitigate risk and increase revenue opportunities. 

The second fueling revolution 

The 25 years from 1905 to 1930 witnessed the birth and explosive growth of gas stations, from a single St. Louis station in 1905 to over 100,000 coast-to-coast in 1930 and peaking at 200,000 in 1970 before starting to drop.² With the proliferation of gas stations came new risks — from fumes, fires, and eventually the CO₂ emissions associated with the vehicles they serviced that began to degrade the climate.

It’s this last risk — the existential risk of a deteriorating climate — that led to the need for electric vehicles and the means to charge them. Traditional transportation generates about a quarter of global CO₂ emissions, while fully electric vehicles emit no tailpipe CO₂ at all.³ But that doesn’t mean EVs are without risk. Every aspect of the shift to EV charging, from manufacturing to operating and continued maintenance, carries potential hazards.

Gas stations tend to be stand-alone operations with some modicum of supervision. Charging stations are unsupervised and open 24/7 as the “30-minute retail economy," with charging hubs surrounded by retail businesses, becomes a reality.⁴

And because charging technology is constantly evolving, the risks will change as well. Level 1 chargers, equivalent to the power from a home’s wall socket, gave way to Level 2 chargers, which still require up to 10 hours to fully charge an EV. Now Level 2 chargers are becoming obsolete, and DC current fast chargers are taking their place.⁵ While convenient, the jump from a residential wall socket to a modern, fast-charging bi-directional technology comes with its own unique risks.

Where do these new risks come from?
 

• Installer injuries. The amount of high voltage electricity at the charging stations poses electrical dangers, such as shocks, burns and electrocutions, which are most common for installers.
• Fender benders. Drivers collide with chargers.⁶ Also common are collisions with EVSE (electric vehicle supply equipment) signs, according to claims data from Chubb.
• User error. Drivers sometimes don’t know how to connect, operate, or park their cars in relation to the chargers.
• Software glitches. When an EV driver plugs in, software links the car and charger. The driver can then encounter blank screens, failed credit card payments, aborted charging sessions, and electric current that ebbs and surges unpredictably.⁷
• Vandalism and theft. Charging cables have copper that can be sold as scrap, and Los Angeles police have warned that incidents of individuals unlawfully cutting and removing cables are growing.⁸ Vandalism is a problem too: “Where there’s a screen, there’s a baseball bat,” said an executive at charging network EVgo.
• Fires. In 2018, in the Netherlands, a charger short-circuit triggered a fire that consumed the car that was charging and an adjacent vehicle as well.⁹
• Charger failures. Remember the squeal of connecting to the Internet over a phone line and the frustration of waiting to send an email? Some of the EV drivers pulling up to the charging stations may be haunted by the ghosts of the early internet connections when they plug in to the chargers and wait, while nothing happens. Surveys estimate the percentage of out-of-service chargers at up to 39%.¹⁰

Where there’s failure, there’s blame and often a lawsuit. Even companies providing responsibly managed beneficial technologies can find themselves vulnerable to claims. But most legal actions are more about batteries than chargers, although overcharging may be involved. General Motors has faced numerous problems over the Chevy Volt: It spent an estimated $2 billion on fixes after owners reported fires when parked or during and immediately after charging.

Risk as the great unifier 

According to economist Noah Smith, everyone who drives is eventually going to be driving an EV. “The simple logic of cost, and the reverse network effect from gas stations becoming unprofitable and disappearing, will push the transition to completion.”¹¹

Climate change won’t wait. The climate provisions of the Inflation Reduction Act fund an aggressive timeline for a vast and complex societal shift. The haste built into the legislation is intended to foster opportunity and solutions, but with likely unintended consequence of intensifying risks.

Such vast and rapid societal shifts are needed yet fraught. The potential for adverse events will grow simply because of the sheer ubiquity of chargers. The most comprehensive approach to managing risk evolves from the ability to learn from experience. Every aspect of the charging life cycle — not just headline-grabbing events like fires but mundane occurrences like snowplows bumping into chargers — needs to be considered, monitored, and mitigated.

And while there isn’t yet a lot of charger experience to draw on, insurers have a lot of experience with adjacent technologies. Chubb already underwrites numerous technologies in the cleantech space. We’ve learned from that experience. With EV chargers, there’s additional complexity and risk for commercial users to consider. Our goal is to share risk management opportunities with these business partners to support the successful implementation of a technology that will be a key component of a climate-forward future.