The current state of the electric vehicle market
Sales of electric vehicles continue to accelerate. Recent figures from the Society of Motor Manufacturers and Traders (SMMT) show 190,000 battery electric cars were sold in 2021 – 11.6% of the total sales. Up from 6.6% in 2020.
The Tesla Model 3 was the 2nd best-selling car in 2021 marking the first time an electric car has made it into the top 10. The Tesla Model 3 was also the top selling electric car.
This WhatCar? article also reports that 12,759 electric vans were sold in 2021. A 142% increase on 2020.
Whilst it is expected that this pattern of growth will continue into 2022, against a backdrop of disruption to the new car market due to the shortage of semi-conductors, there are concerns that interest could be dampened due to a number of factors including;
- cuts to the government’s electric grants – affecting both cars and vans
- continued limited and patchy investment in on-street chargers
- changes to plans for electric chargers to be compulsory in all commercial buildings with large car parks
But with the government’s target to ban the sale of new petrol and diesel by 2030 fast approaching, electric car growth looks set to only continue.
Is the insurance market ready for this shift to electric vehicles?
A shift towards electric is certainly underway. But how prepared is the insurance market for the rise in electric vehicles?
A quick search of the market suggests that more and more insurers are offering insurance for electric cars. Either as a standalone, separate tailored electric car insurance product, or covering electric vehicles under a standard car insurance policy.
Some key areas which insurers are having to consider are:
The issue of liability linked to charging
For example, if a member of the public trips over a cable whilst the car is being charged and injures themselves. Is this covered? Under what circumstances will the policy cover this and how much cover will be provided? This will all need to be defined by the policy and the insured will need to understand what is expected of them.
Whether the battery is owned or leased
This can impact the car’s market value, and where payments need to be made in the event of a claim. The insurer will need to ensure that they are informed by the insured about battery ownership upon taking out the policy and adjust cover accordingly.
The ability to offer equivalent electric or hybrid courtesy cars
Is there availability to meet potential demand? Insurers will also need to consider subsequent impact this can have on claims costs and factor this into premiums.
Premiums
Costs of replacement parts can be higher for electric vehicles. Parts can also be harder to come by, and the number of electric car repairers remains limited. This needs to be factored into premiums as well as repair timeframes.
In many cases, premiums for electric car insurance policies will be higher than for petrol/diesel vehicles for these reasons. We may see this change over time as electric vehicle technology becomes more mainstream
New theft risks
Theft of charging cables is another risk insurers will need to account for within the policy and provide adequate cover for.
Insuring electric vehicles
It is certainly reassuring that the insurance market is adjusting to the growth of electric vehicles and that many mainstream insurers now provide an option for electric vehicle owners. As more of us drive electric vehicles and insurers gain more and more risk data, it wouldn’t be surprising if we may see further changes to the insurance market.
At Anthony Jones we work with a range of insurers so are well placed to be able to find a solution for your electric vehicle insurance. Whether you are looking to insure a fleet of vehicles, or a single private use vehicle we can work with you to get the right insurance for your needs. Contact us today.
