Electric vehicle charging stations promote a fueling revolution

Dania Maxwell/Bloomberg

Major change is forthcoming with the prospect of electric vehicle (EV) charging stations overtaking the number of gas stations across the United States. As the Inflation Reduction Act directs billions of funds towards clean energy and U.S. businesses embrace their opportunities to contribute to a net-zero economy, EV charging infrastructure will become more ubiquitous.  The property and casualty insurance industry has a critical role to play as these changes unfold, since it works so closely with businesses that own or rent commercial real estate with parking facilities. Whether an office building, retailer, park, gym or university, the growing population of electric vehicle owners will seek out establishments that offer the necessary charging infrastructure.  

Commercial establishments intending to install such systems, and those currently operating them, need to take into consideration the opportunities this new reality will present. In addition, they should prepare for potential overhead and risk management considerations, as well. Being proactive about preparing for these new exposures and ensuring best practices are executed will help further mitigate risk and increase revenue opportunities.

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. With the proliferation of gas stations came new risks — from fumes, fires, underground tank leakage and eventually the CO2 emissions associated with the vehicles they serviced that contributed to a changing climate.

It's this last risk — the existential risk of a changing climate — that is driving an increasing reliance on 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. 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.

Charging stations tend to be stand-alone operations with a few, if-any, on-site employees. Many charging stations are unsupervised and open 24/7 as the "30-minute retail economy," with charging hubs surrounded by retail businesses, becomes a reality.

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. 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?

• Installation. The amount of high voltage electricity at the charging stations poses electrical dangers, such as shocks, burns and electrocutions. Installation will often involve some amount of trenching; new installations at existing establishments will need to consider underground utilities. Pedestrian safety and precautions against attractive nuisance risk will also need to be considered for installations at active business operations.  
• Fender benders.  Drivers collide with chargers. 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.
• 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. 
• 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.
• 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 into the chargers and wait, while nothing happens. Surveys estimate the percentage of out-of-service chargers at up to 39%.

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 around EV risks to this point involve batteries more commonly. 
Risk as the great unifier
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.

Journalist Noah Smith described this dynamic well when he said 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." The property and casualty insurance industry has an important role to play in encouraging this transition. 

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.