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Current insurance issues for electric vehicles

Rapid improvement in alternative technologies and incentives offered by the UK Government, to help meet their pledge to reduce emissions by at least 80% of 1990 levels by 2050, under the Climate Change Act, have led an increasing number of drivers to consider switching to electric vehicles (EVs).

Written by Paul Brown on 25th September 2019

Current insurance issues for electric vehicles

Rapid improvement in alternative technologies and incentives offered by the UK Government, to help meet their pledge to reduce emissions by at least 80% of 1990 levels by 2050, under the Climate Change Act, have led an increasing number of drivers to consider switching to electric vehicles (EVs).

A poll conducted by Ipsos Mori for NGO Transport & Environment (T&E), found that 40% of Europeans, including those in the UK, were likely to choose an electric or fuel cell powered vehicle as their next car.

A report by the independent Committee on Climate Change, stating that a switch to alternatively powered vehicles could play a major part in helping the UK meet its emissions targets, has led to the UK Government offering incentives such as nil road tax on electric vehicles under £40,000 and Plug-in grants of up to £3,500, to help drivers purchase brand new low-emission vehicles and the 2017 car tax band overhaul.

This is all very good for the environment but EV’s throw up a number of concerns for insurers, which are likely to make them more expensive to insure than traditionally powered vehicles.

 

 


There are a number of insurance implications that motorists should be aware of:

1. EV technology is still relatively young and the cars are relatively expensive so the cost to repair, or replace, specialist parts tends to be higher.

2. As electric engines make little or no noise, there is an increased risk of collisions as pedestrians and other road users may not hear the vehicles approach. Research shows that electric cars are about 40% more likely to hit a pedestrian than a conventional vehicle.

3. Whether the battery is hired or leased increases the complexity of claims for electric vehicles. Car manufacturers Nissan and Renault initially only sold their new electric vehicles with the option of leasing the car’s batteries. This gave the consumer peace of mind that, if the car’s battery were to drop below 75% of its original capacity, the manufacturer would replace it for free. For example, if a vehicle is involved in a collision and the car’s battery is damaged, it is unclear whether the driver, or the manufacturer would be responsible for replacing it.

4. As EV’s need to be plugged into roadside charging points, for long periods, the driver owes a duty of care to members of the public that could trip and injure themselves on the charging cable.

As a result, although many electric cars are smaller and less powerful than traditional vehicles, according to Vantage Leasing Solutions Ltd an electric vehicle owner could pay up to 14% more for EV insurance.

What about the future?

Insurers base their pricing structures on statistics and when new ground breaking technology emerges they will traditionally proceed with caution. Whilst drivers need to be aware that there are some major differences to traditional motor policies as alternative vehicle technology becomes more mainstream, statistics will emerge and maintenance, parts and therefore insurance costs, are likely to decrease.

If you have any concerns regarding going electric speak to your usual Franklands’ contact.

 

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