Understand legal, insurance risks of electric vehicle chargers
Charging equipment is often part of a one-stop shopping experience for electric vehicles. However, there are some risks associated with installing and using such chargers – particularly if the unit fails and a driver is injured, property is damaged, or environment is contaminated.
This means it’s important to understand related warranties, what installation steps must be followed, what insurance requirements may apply, and what collateral the lessors might request.
Product liability warranties
First there’s the question of whether a manufacturer’s warranties extend all the way through the retail chain to the charging equipment’s end user. The charger may be made by a third party and not necessarily the vehicle manufacturer.
Contracts will likely indemnify and insure product-related liability associated with the vehicle. But if the coverage does not extend to exposure for the charging equipment, talk to insurance advisors to understand what additional coverage might be needed to adequately protect yourself.
Insurance requirements and liability
Many vendors and lessors might also require carriers to sign a form that addresses the way charging equipment is installed.
For example, the vendors and lessors may include warnings to hire a licensed electrician, check for any municipal permits needed for the charger, and contact a real property insurer – to double check if any changes or restrictions apply to existing insurance coverage.
Review these warnings and instructions, follow them specifically, and keep records about their compliance. This will offer evidence of due diligence if there is a charger-related accident, to show the incident was not caused by non-compliant installation.
If the electric vehicle fleet includes the purchase or lease of rapid chargers that pull more energy when in use, then there may even be higher electrical safety standards, permits, insurance and other standards to meet.
Your insurer might also request photos or document that show that the unit was installed correctly, so follow any instructions received from the vendor or lessor, and speak with insurance advisors about any requirements before attaching the charging equipment.
Is the charging unit part of the vehicle?
Since an electric vehicle cannot work without a charging unit, there is also a question as to whether the unit should be considered part of the vehicle and covered by the vehicle insurance policy. The answer to this question is likely to come from the courts at some future date.
In the meantime, lessors may require security connected to the financing of these electric vehicles and charging units. This could extend beyond a personal property security registration, since the units are currently considered a “fixture” attached to real property rather than an addition to the vehicle itself.
Lessors may also require a notice of security interest (NOSI) on title to the land where the unit is attached, and to be named on the real property insurance policy as a loss payee. This would potentially allow the lessor to have priority over a mortgage provider and subsequent land buyers, but only when it comes to the charging unit.
Impact on insurance policies
Vendors and lessors might also ask to be named on both the auto policy and real property insurance policy to be covered for losses of the electric vehicle, charger, or damage linked to a vehicle accident or charger explosion.
There are court decisions indicating that fueling a vehicle with gasoline is considered part of its normal operation, and that accidents could be covered if there is no intervening factor like the driver lighting a cigarette. The same argument could be made that the charging process is part of the electric vehicle’s normal use, but the courts will likely have to decide this point, too.
The vehicle policy, real property policy, or both could respond to an incident for full coverage. This is another reason why insurers might request records relating to the charger’s installation. The insurers, meanwhile, might have their own set of requirements to understand and follow so coverage is properly extended if something occurs.
When purchasing, leasing, or leasing to own charging units with electric vehicles, be sure to:
- check what warranties you are entitled to from the charging equipment manufacturer or other parties;
- check what installation and other requirements are imposed by the vendor or lessor, and be sure to follow them;
- speak to vehicle and real property insurers to understand what coverages they need and additional requirements that might apply;
- understand what collateral they are providing the lessors, and what the impact of this may be.
If you have any questions regarding the purchase or lease of electric vehicle charging equipment, please feel free to reach out to any member of Miller Thomson’s Transportation & Logistics team.
This article was written in conjunction with Jennifer Babe, a partner in Miller Thomson’s Financial Services group.
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A unit owner of a condo has installed an Electric Vehicle Charging Station in his underground parking spot. Does the condo corporatio0n need to have its condo insurance policy reviewed for Liability against fumes, fire, or explosion? What about his own personal car insurance?
Does there need to be in the Condo Corp Insurance Policy, extra Condo Liability Insurance for Vapors, Fire or Explosion for an Electric Vehicle Charging Station installed in an underground parking spot of the Condominium?