South Korea’s Ministry of Climate, Energy and Environment has opened a tender for a new electric vehicle fire safety insurance program, a move that could influence how motor insurers in Asia approach battery‑related property risks.
The “Electric Vehicle Fire Safety Insurance Project,” announced on March 12 and reported by Maeil Business Newspaper, is scheduled to operate for three years starting in 2026. Insurers have until March 27 to submit proposals. The program is structured as a government‑backed scheme that shares the financial impact of EV fire losses between public funding and private carriers.
Under the scheme, the ministry plans to work with EV manufacturers and importers to jointly pay premiums, combining state support with industry contributions. The authorities have issued guidelines setting minimum standards for eligible policyholders and coverage limits, framed within subsidy rules for EV fire safety insurance. Within those parameters, insurers are being asked to design products with what the ministry has described as “excellent conditions,” subject to a total premium cap of 6 billion won over the project period.
According to ministry officials, the intent is to encourage competitive proposals while keeping overall public expenditure in check. The initiative is aimed at managing potential losses from EV fires occurring in shared or high‑density locations such as apartment parking areas, public car parks, and charging facilities. The project provides an example of how a government may use subsidies and co‑funding to address risks linked to new vehicle technologies.
The insurance will apply to third‑party property damage caused by EV fires that occur when vehicles are parked or being charged. The guarantee limit has been set at a minimum of 10 billion won per incident, with an annual aggregate limit of at least 30 billion won. By centring the coverage on third‑party property rather than own‑damage or bodily injury, the scheme addresses scenarios in which a single fire can damage multiple vehicles or surrounding structures.
This reflects concerns among insurers about accumulation risk in underground car parks, mixed‑use buildings, and large charging hubs, issues that are also emerging in other Asian markets as EV numbers grow. The ministry’s role in defining baseline terms is expected to serve as a reference point for commercial policies in Korea and may inform regulatory or product discussions in neighbouring jurisdictions considering similar approaches to EV and battery‑related exposures.
The program follows a series of lithium‑ion battery incidents involving EVs, e‑scooters, and portable power devices in Korea. Data from the National Fire Agency cited by CTIF indicate that reported battery‑related fires increased from 49 in May to 67 in July 2025, with many incidents linked to overcharging, faulty chargers, or the simultaneous charging of several devices. Two incidents in August 2025 drew particular scrutiny: an e‑scooter battery fire in a Seoul apartment that resulted in two fatalities, and a camping battery fire in Dongducheon that led to several people being treated for smoke inhalation.
Earlier EV fire events, including a 2024 blaze in Incheon involving a Mercedes‑Benz that damaged 140 vehicles and disrupted nearby utilities, have contributed to public concern over so‑called “battery phobia.” In response, major automakers and battery producers – Hyundai Motor, Kia, LG Energy Solution, Samsung SDI, and SK On – formed a joint task force to develop additional safety technologies, common safety protocols, and improved firefighting methods for EV‑related incidents.
The EV fire insurance project is being introduced as Korea’s EV market expands again after two consecutive years of declining demand. The ministry reported that around 41,000 new EVs were registered from January through the end of February 2026, compared with 16,000 in the same period of 2025. Higher fuel prices and updated subsidy rules have contributed to the rise in registrations. Several local governments, including Daejeon and Cheongju, exhausted their first‑half EV subsidy allocations earlier than planned.
According to Korea JoongAng Daily’s report, the ministry’s 2026 subsidy guidelines include a “transition” subsidy of up to 1 million won (about US$680) for consumers who sell or scrap an internal combustion engine vehicle and purchase an EV. Industry data show that domestic EV sales in February reached 35,766 units, surpassing hybrid sales of 29,112 units for the first time since October 2022. A ministry official said that about 6,000 EVs had already been supplied recently and that subsidies were being used at a rapid pace. With many local governments having depleted their initial allocations, the ministry is considering advancing the timing of the second‑round subsidy distribution.
Analysts note that while current conditions support EV demand, longer‑term sales trends – and the associated risk profile for insurers – will depend on energy prices, charging infrastructure, and the trajectory of incentives. “Higher oil prices are clearly helping to boost preference for EVs in the short term. “But charging is still inconvenient, and incentives are gradually shrinking, so it is hard to say the market has completely overcome the slowdown,” Kim Pil‑su, president of the Korea Electric Vehicle Association and a professor at Daelim University, said. The Korean scheme is likely to be monitored as one example of how governments, manufacturers, and carriers allocate responsibility for EV‑related fire risks, particularly as EV penetration and battery‑related accumulations increase in the region.
