Owners of modified or illegal e-bikes could be putting their insurance coverage at risk, leaving them exposed in the event of a house fire or accident.
The warning comes ahead of Christmas as insurers urge prospective e-bike and e-scooter buyers to source the battery-powered mobility devices from reputable suppliers.
The popularity of e-bikes has soared in the last five years, with sales and imports nearly tripling.
But some users modify the devices to increase their maximum speeds, while others try do-it-yourself conversion kits to fit regular pedal bikes with batteries and motors.
The kits often use second-hand batteries, poor-quality components or inadequate wiring, causing a higher risk of electrical failure and potential lithium-ion battery fires.
While e-bikes were typically covered under home and contents policies, the Insurance Council of Australia warned those that do not meet the legal definition, such as any modified after purchase, might be excluded, which would impact on coverage.
"We encourage anyone with an e-bike or e-scooter to have a discussion with their insurer to ensure they have the appropriate coverage they need," chief executive Andrew Hall said.
"The growing popularity of lithium-ion battery powered devices such as e-scooters and e-bikes is evident, but it's important for users to be aware of the potential risks and implement safety measures."
Modified e-bikes that did not meet the legal definition could be considered motor vehicles, requiring registration and separate, compulsory third-party insurance.
Fire authorities have also warned that people should avoid charging lithium-ion batteries overnight or while unattended and to only use chargers supplied with devices.
There have been 303 lithium-ion battery-related incidents so far this year across NSW, 106 of them involving e-mobility devices.
Meanwhile, Victorian firefighters have been responding to almost one fire a day caused by rechargeable lithium-ion batteries.
"Unfortunately, we've seen how lithium-ion battery fires have led to fatalities and we've seen other people lose their homes and all their possessions due to such blazes," Fire and Rescue NSW commissioner Jeremy Fewtrell said.
"Choose reputable brands when you're shopping, use the chargers that came with them, don't mix and match and always be attentive when you are charging."
Federal and state governments have stepped up their crackdown on modified e-bikes over the past year, banning the devices on NSW and Victoria trains due to safety risks.
Queensland is also considering a registration system after a spate of fatalities.
