By: Jonathan Maher and Aisha Lala


In this short update we note that NSW authorities are reporting what are believed to be the first fatalities related to lithium-ion battery fires.

If confirmed, this tragedy underscores the growing concerns around the risk posed by lithium-ion batteries, and the potential insurance implications.


The incident

On 29 February 2024, four people were inside a townhouse at Teralba near Lake Macquarie in NSW when a fire broke out. Two of the occupants managed to escape, but tragically two others were killed. The property itself was largely destroyed.

On 5 March 2024 Fire and Rescue NSW (FRNSW) announced that the cause of the fire appears to have been the compromise of a lithium-ion battery (LIB) inside the property resulting in ‘thermal runaway’, a known risk with this type of battery whereby a lithium-ion cell overheats and triggers the release of energy leading to an uncontrollable increase in temperature, the release of toxic gases and eventually combustion.

The NSW Coroner is yet to formally determine the cause of deaths of the deceaseds, however if FRNSW’s assessment is correct, it is understood that the case will mark the state’s first LIB-related fatalities.

Insurance implications

Many details of the incident remain unknown, and care must be taken not to speculate on this specific case.

However, what is clear is that if an LIB contained in a household product caused a fire and the deaths of two people, the potential legal and insurance implications could include:

  • damages claims by the estate of the deceased and/or dependants of the deceased against the supplier and/or manufacturer (which might include the importer) of the subject product under the provisions of the Australian Consumer Law
  • damages claims by persons injured but not killed in the fire, under the same provisions
  • a first party property claim in relation to damage to the building and contents, and
  • a subrogated recovery by the property insurer against the supplier / manufacturer of the product.

Developments

As we reported in our article on 20 December 2023, the risks associated with LIB fires are becoming increasingly apparent.

In addition to the incident in Teralba, FRNSW reported this week that there have been 45 LIB-related fires in NSW this year alone, at an average of five per week, and some 269 such fires in 2023. Given that LIBs are generally found in products kept in and around the home, the potential for harm to person and property is obvious.

At the time of writing, there has been no formal government or regulator response to the ACCC’s October 2023 Report on LIBs (discussed here), including its recommendations regarding the need for consistent nationwide testing, labelling, transportation, storage and disposal requirements for LIBs.

The report has however drawn criticism from some commercial sectors, such as the e-bike industry, for not going far enough in terms of the safety measures recommended, and the urgency required.

It appears that increased regulation around LIBs is inevitable, and simply a question of how and when.

These issues are continuing to develop rapidly, and we will continue to update the insurance market as developments arise.