Insuring Lithium Battery Risks
As data centres scale in size and complexity, underwriting capacity becomes more than a pricing lever, it’s a gateway to capital. Without robust fire protection, facilities risk being uninsurable, un-investable, and ultimately unsustainable. In this article, we identify the critical importance of fire risk protection for your Data Centre Facility, to help you manage risk and the insurance process.
- Benefits
- The two different levels of expected risk protection
- A side-by-side comparison of Level 1 & 2
- Implications for data centres for not having Level 2
Benefits and risks of Lithium-ion batteries
Lithium-ion batteries are increasingly used in data centres for their high energy density and efficiency. However, they pose unique fire risks, particularly thermal runaway, which can lead to uncontrollable fires and significant property damage. As a result, insurers are placing stricter requirements on fire protection systems for lithium battery installations.
Two tiers of protection
Level 1: Systems typically include standard clean agent or gaseous suppression, suitable for general electrical rooms. These systems lack early intervention mechanisms and may not effectively mitigate the risks associated with lithium-ion batteries.
Level 2: Fire suppression systems, by contrast, incorporate enhanced safety features tailored to lithium-ion environments. These include off-gas detection systems to identify volatile organic compounds before ignition, automatic battery isolation to prevent escalation, and redundant suppression systems such as water mist combined with clean agents. These measures are critical for early detection and containment of thermal runaway events.
Differences in Level 1 and Level 2 protection
| Feature | Level 1 Protection | Level 2 Protection |
| Detection method | Standard smoke/heat detectors | Off-gas detection + thermal sensors |
| Suppression system | Clean agent or gaseous suppression | Hybrid systems (e.g. water mist + clean agent) |
| Battery isolation | Not typically included | Automatic electrical isolation via BMS |
| System redundancy | Single suppression system | Redundant suppression systems |
| Response time | Reactive (after ignition) | Proactive (before ignition via early detection) |
| FM global compliance | Basic compliance | Enhanced compliance per DS 5-33 |
The potential cost implications
Failure to implement Level 2 protection can result in declined insurance coverage, higher premiums, and increased risk exposure. Insurers may view non-compliant facilities as uninsurable or require costly retrofits before offering property damage cover. It could well have consequences for the raising of finance and the acquisition of future customers
Get in touch today
At Price Forbes, we help clients manage these risks with clarity and confidence. Our specialist teams understand the evolving landscape of data centre underwriting and what it takes to stay ahead of the curve.
Phil Bower
Global Data Centres Insurance Practice Leader
Price Forbes
Phil.Bower@priceforbes.com