Battery insurance basics!
We had the chance to dive into the world of battery insurance with our friends Fern Morrison and Gabriele Pozzato, co-founders of IronGrid. Their mission is to demystify battery insurance by making it more transparent, affordable, and founder-friendly.
Note this isn’t a sponsored post, but we were genuinely interested for them share more about battery insurance! Learn more about insurance options for your system here.
Gabriele and Fern started IronGrid to take care of the thing no hardware founders want to focus on: their insurance.
We talked to 100s of teams spanning grid-scale batteries, industrial robots, hydrogen transportation, cloud seeding, etc.
The conversation would start with learning about the technology – and then we would ask – what liabilities does your business pose, and what insurance products are you using to manage that risk. The most common answer was: “I’ve been meaning to get to this… we probably need better coverage, can help us figure that out?”
Insurance is intentionally confusing – but important – so we are writing this piece with a focus on the battery space called battery insurance basics:
Battery insurance basics:
Battery storage projects carry unique risks: thermal runaway, electrical fire hazards, and heavy-equipment accidents during installation. The first step is understanding which liabilities you are responsible for - then finding the right insurance products to address them1.
Common Battery Risks & Liabilities
Think through “what can go wrong” on a battery project. Typical dangers include:
Bodily Injury: Anyone could get hurt by your system – for example, an installer could get an electric shock or bystanders could be harmed by a fire. This leads to general liability claims.
Property Damage: Your battery or its components might fail and start a fire, damaging nearby buildings or equipment.
Product Defects: Covers you if a hidden flaw in your battery shows up after it’s sold and causes damage. For example, a pack that passes outgoing quality control but later goes into thermal runaway and starts a fire. Even if you didn’t know about the defect at the time, you’re still responsible — product liability insurance is what protects you.
Site Liability: You install on someone else’s property (warehouse, solar farm, home). If your system overheats and damages their building, they might expect you to pay.
Subcontractor Risks: If you hire electricians or installers, mistakes by them could cause a loss.
Battery degradation: No one is hurt, but the battery degrades much faster than promised. That’s a warranty/performance guarantee issue, not covered by standard liability policies. It’s up to you if you want to guarantee certain performance (eg, 70% energy capacity retention for 10 years).
So there are a lot of different ways things can go wrong – but who is responsible for what?
Learn how large each of these risk factors are for your business here.
When should I start thinking about this?
This is up to you, your technology and your company. Here is a general guide:
Key Insurance Policies (What They Cover)
Here are the main types of policies we’ve been talking about and a simple explanation on what they mean2.
General Liability (GL): This covers accidents on your site or during installation. If someone trips over a cable and breaks a leg, or if a fire from your system damages a neighbor’s fence, GL steps in. It handles third-party bodily injury and property damage from your operations.
Product Liability: This protects you if a product you made later hurts someone or causes damage. For instance, if a faulty cell overheats and leads to injury or a fire after installation, a product liability policy would cover claims. Some insurers bundle this with GL, but for high-risk hardware you often want a dedicated product-liability rider or policy.
Property / Equipment Insurance: Your physical assets (batteries, inverters, containers) need coverage too. A property insurance or “inland marine” policy pays to repair or replace your equipment if it’s destroyed by fire, storm, theft, or vandalism. Without this, a single fire could bankrupt your hardware.
Workers’ Compensation: Legally required in most places, this covers on-the-job injuries to your employees. If an installer gets hurt installing your battery, their medical bills and wage replacement come from workers’ comp, not your general liability.
Professional Liability (Errors & Omissions): If your startup is also designing or engineering systems, you need E&O (tech liability) insurance. This kicks in when a design mistake causes financial loss (say a poorly sized battery fails to deliver promised power, costing the customer money). It’s not for physical damage, but for contractual or consulting errors.
Umbrella / Excess Liability: Battery incidents can be catastrophic (in a thermal runaway event). Umbrella insurance gives you extra liability limits above the base GL/auto limits. If a worst-case event exceeds your standard policy, the umbrella covers the gap.
Subcontractor Insurance: If you bring in subcontractors (electricians, welders, etc.), make sure they have insurance. The best practice is having them name your company as an additional insured on their GL policy. This way their liability coverage extends to you for their work.
Warranties / Performance Guarantees: These are the promises you make about how long and how well your system will perform. If the system degrades faster than promised, you’re on the hook. You can either self-insure (absorb the cost of repairs/replacements) or transfer the risk to a third-party warranty or insurance provider. Offloading this liability frees up your capital to focus on scaling instead of keeping reserves for potential failures.
Specialized policies: There are other specialized covers too – for example, cyber insurance if your BMS is networked, or environmental/pollution liability if a spill from your batteries contaminates soil. As you grow, talk with an insurance broker about any gaps.)
Regulatory Considerations (US vs. Europe)
Insurance doesn’t exist in a vacuum – regulations and standards can dictate what insurers expect you to do:
United States: There’s no single federal “battery law,” but there are key standards. For example, NFPA 855 (the fire code for energy storage) and UL 9540/9540A (test standards for BESS fire safety) are widely enforced by insurers. When you buy insurance, carriers will likely require proof that your system meets these standards – e.g. UL 9540A fire-suppression tests. Local building and fire codes (often based on the International Fire Code and NFPA standards) are also critical: some jurisdictions now mandate things like sprinkler systems and safe container spacing. Basically, insurers expect you to follow the latest safety rules (many of which they helped create!).
European Union: Europe is tightening rules on batteries. Most notably, the EU Battery Regulation (Reg. 2023/1542) took effect in 2024 and will require CE-marking of all batteries from Aug 18, 2024. CE marking means you’ve met EU safety and environmental standards. Under this regime, battery manufacturers and importers have new obligations (like supply chain due diligence and recycling targets). There’s also a new EU Product Liability Directive (effective Dec 2024) that shifts the burden of proof toward manufacturers: if a battery isn’t as safe as people expect, it’s legally “defective”. In practice, this means your products must meet strict EU safety rules or risk automatic liability.
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Disclaimer: This article is for general informational purposes only and does not constitute legal or insurance advice. Coverage, exclusions, and requirements vary by insurer, jurisdiction, and policy. Always review your own policy documents and consult directly with a licensed insurance provider before making decisions about coverage.
This overview is for informational purposes only. Coverage, exclusions, and limits vary by insurer and policy. The writers are not responsible for determining what is or isn’t covered. Always review your specific policy documents and consult with your insurance provider for exact terms.