With the evolution and adoption of new technologies, lithium-ion batteries have become ubiquitous in our everyday life both at home and in businesses up and down the country. They power everything from our smartphones and laptops to electric vehicles and energy storage systems. While these batteries have become integral in powering our modern life, they come with their own set of risks, especially for businesses that rely on them. From an insurance perspective they’re seen as an ‘emerging risk’ and we’re hearing more and more news stories about lithium-ion battery risks. In this blog post, we’ll explore what lithium-ion batteries are, how they might be used in a business environment, the regulations surrounding them in Australia, and how businesses can protect themselves from potential risks.

What is a Lithium-Ion Battery?

Lithium-ion batteries are rechargeable energy storage devices known for their high energy density, efficiency and long life span. They’re now the most common battery used in rechargeable devices but come with a range of known risks. This is due to the chemicals used in their production and their internal processes. They work by moving lithium ions between the anode and cathode during charging and discharging cycles and they’re highly flammable.

How Are They Used In A Business Environment?

In the business environment, lithium-ion batteries are prevalent in a variety of applications and devices including, but not limited to:

  1. Electronics: Businesses use lithium-ion batteries to power laptops, smartphones, tablets, and other portable electronic devices.
  2. Electric Vehicles (EVs): Companies in the transportation sector, including delivery services and logistics, rely on electric vehicles powered by lithium-ion batteries.
  3. Energy Storage: Businesses use lithium-ion batteries for backup power solutions and renewable energy storage, enhancing energy efficiency and reliability.
  4. Manufacturing and Tools: Power tools and other industrial equipment often use lithium-ion batteries for their high power output and longevity.

Risks of Lithium Ion Batteries

Among the biggest risks posed by lithium-ion batteries is overheating. This can lead to them exploding or causing fires, potentially resulting in property damage or personal injury from smoke inhalation or chemical burns. They can also be particularly difficult to extinguish if they do catch on fire as they can re-ignite and if it is a large battery, possibly burn for days.

Improper handling or damage such as puncturing or exposing the battery to extreme temperatures, can also increase the risk of failure.

According to a report by The Australian Competition and Consumer Commission, product recalls related to lithium batteries affected an estimated 89,000 products between 1 January 2017 and 31 December 2022 and at least one Australian is known to have died as a result of a fire caused by a lithium-ion battery.

Ensuring proper usage, storage and disposal of these batteries is crucial to mitigate these risks in everyday use. It’s also important to make sure you buy your devices, batteries and accessories from a reputable supplier to ensure the highest safety standards have been met when producing the device.

Lithium Ion Battery Storage

Proper storage of lithium-ion batteries is crucial to maintaining their performance and longevity. First, store lithium-ion batteries in a cool, dry place to avoid exposure to extreme temperatures, which can degrade their capacity. Ensure the batteries are charged to around 50% before storage, as this state of charge minimises stress and prolongs battery life. Avoid storing them in areas with high humidity to prevent potential moisture damage. Lastly, keep the batteries away from flammable materials and direct sunlight to reduce the risk of fire hazards.

Lithium Battery Regulations in Australia

One of the complications in Australia is that the different states and territories take varying approaches relating to electrical safety issues.

“The ACCC considers the most significant challenges arising from the current regulatory framework are the lack of uniform state and territory compulsory recall powers and lack of regulatory coverage for extra-low voltage products (which includes a significant proportion of Li-ion battery products).”

As such there is a lack of a consistent, comprehensive regulatory framework to protect Australian consumers and businesses.

Protecting Your Business from Lithium-Ion Battery Risks

If your business uses equipment containing lithium-ion batteries, it’s essential for you to understand what you can do to mitigate the risks. As we’ve highlighted above, proper storage of products and devices containing these batteries is paramount. In addition, we recommend the following:

  1. Regular Inspection: Conduct regular inspections of batteries for signs of damage, swelling, or overheating. Replace any damaged or defective batteries immediately.
  2. Employee Training: Train employees on the proper handling, charging, and disposal of lithium-ion batteries. Ensure they are aware of the potential hazards and emergency procedures.
  3. Safe Charging Practices: Use certified chargers and avoid overcharging or deep discharging batteries. Implement a charging station protocol to prevent overheating.
  4. Emergency Preparedness: Equip your facility with appropriate fire suppression systems, such as Class D fire extinguishers, and establish an emergency response plan for battery-related incidents.
  5. Compliance with Regulations: Stay up-to-date with Australian regulations and standards related to lithium-ion batteries. Ensure your business complies with all legal requirements.

While most insurers haven’t yet excluded lithium battery fires from their business insurance policies, it’s worth talking to your AIB broker to ensure that you have the right insurance cover in place that’s best suited to your needs and circumstances and offers some protection from lithium-ion battery risks.


While lithium-ion batteries are indispensable for modern business operations, they come with inherent risks that must be managed proactively. By understanding the nature of these batteries, adhering to regulations and implementing safety measures, businesses can protect their assets, employees and the environment. At AIB Insurance, we are committed to helping you navigate these challenges and safeguard your business against potential risks. For more information on how we can support your business, contact us today.