Why Is Electric Car Insurance More Expensive?

Electric car insurance is more expensive than conventional insurance, largely due to the need for specialist parts, says Trend Tracker.  However, repair costs for electrification technologies will improve as OEMs optimise designs, according to a new report due out on Thursday 9^th September. Due to be launched on World EV Day – a global movement to celebrate and support the transition to EV mobility – Trend Tracker’s second in the series of quarterly reports, ‘EV Readiness’ features a wide-ranging industry study, expert insight and analysis of the latest EV market trends.

Some of the key findings from the report include:

·        Electric car insurance is more expensive than conventional insurance.

·         The approach of major insurers to electric cars insurance cover is changing.

·         Industry best practice when repairing an electric car: focusing mainly on the precautions of Body and Paint technicians when working with this type of vehicle. (Nah, we have no idea what they mean either – Ed)

·         Government support;

“Subsidies and incentives will need to be prepared to support consumers through these concerns to meet the ambitious targets of limiting new vehicles sales to EV vehicles only by 2030 and net zero as a country by 2050” said Steve Silverwood, MD ECA Business Energy. Trend Tracker survey respondents (automotive supply chain) have more concern and risk than optimism but have had good support from OEMs and Thatcham to adjust.

·         Repair costs for electrification technologies will improve as VMs optimise designs. (Will they? Some say that electric vehicles are in their infancy, essentially at the same point petrol cars were at in the 1920s when DOHC, fuel injected engines were a pipedream – Ed)

·         Skills gap widens: “There is understandable concern across the industry about the yawning skills gap that needs to be narrowed if the entire value chain is to deal safely and efficiently with emerging risks posed by new technologies,” said Dean Lander, Head of Repair Sector Services at Thatcham Research,in his Foreword in the report.

IS THE PROBLEM THE BATTERY PACK?

Insurance Edge has learned from one salvage specialist that many electric cars are written off because the batetry pack is a load-bearing member of the chassis. Unlike a conventional car, it has very little give and no crumple zones. The impact energy from a collision is also distributed elsewhere, and this can include another vehicle, thus resulting in two written-off cars, not just one. The problem isn’t specialist parts, the problem is the sheer cost of replacing the battery pack, recalibrating all sensors and systems etc. Recovery of vehicles can also be more expensive because many electric cars weigh over two tons. A Porsche Cayenne hybrid for example comes in at 2370Kgs, or around 2.6 tonnes.

Storage of battery packs while vehicles are being repaired is another expensive process. Outdoors or under cover, no stacking allowed, how trained are the staff, who deals with the lithium fire risk and what are the insurance costs on a battery pack storage facility likely to be long term etc?

Paul Sell, Associate Director, Industry Insights, said:

“There are many key contributors to this report which is a real eye opener to the various challenges and opportunities the electrification of the car parc is presenting, these include Fix Auto, Vella Group, and Nationwide Vehicle Recovery. Results of an exclusive consumer survey conducted with Consumer Intelligence and our recently conducted industry survey conducted with NBRA and ARC360 to understand the views of businesses in our industry,”

The ‘EV Readiness’ Report is free to subscribers of Trend Tracker and available to purchase for £395+VAT. The EV report will be followed by a focus on Supply Chain Sustainability in the Autumn