More than 300 years after the first Lloyd’s insurance contract for a ship was arranged in a London coffee shop, the marine insurance world faces a new and serious challenge. Lithium-ion batteries, now common in electric vehicles (EVs), are creating a big fire risk on ships. These batteries, which pack a lot of power, are transported in huge numbers on massive container ships and car carriers. This has raised the chance of major fires at sea.
A sharp reminder of this danger happened in June when the Morning Midas, a 600-foot car carrier carrying over 3,000 vehicles, caught fire off Alaska’s coast. The fire started on a deck full of electric vehicles and quickly grew out of control. All 22 crew members had to abandon the ship. The blaze burned for weeks before the ship and all its cargo sank into the Pacific Ocean. Authorities believe the lithium-ion batteries were likely the cause, though the exact reason is still under investigation.
Ship fires are not rare; marine insurance brokers say there are about four to five fires or explosions on vessels somewhere in the world every week. When lithium-ion batteries are involved, these fires can cause severe damage. They are tough to put out, especially at sea. Guy Worsley from Rothbury Insurance Brokers explained that fires on ships carrying EVs can wipe out everything on board very quickly. While these battery fires don’t happen often, their impact can be huge.
Regulators like the International Maritime Organization (IMO) have introduced stricter rules for moving lithium-ion batteries. These include better cargo reporting, safer storage, and improved fire detection. Still, the insurance industry is already making moves. Insurers now ask for detailed paperwork on battery shipments and proof that safety codes are followed. Some are adding exclusions linked to lithium battery fires and shifting some responsibility to manufacturers. Worsley says some policies even require that batteries are handled according to manufacturers’ instructions, including the use of original chargers.
With more electric vehicles on the seas, the risks tied to lithium-ion batteries are only growing. Both regulators and insurers are stepping up efforts to reduce the chance of disaster and the heavy losses that come with it.