Electric Vehicles: What’s the Risk Conversation?
The transition to Electric Vehicles is a key policy within the Sustainability agenda and at Zurich Municipal we are aware of many Local Authorities who are moving towards a fully electric vehicle fleet, or who may be trying out a small number of vehicles on a ‘test and buy basis’.
Sustainability is a very important topic for all public sector organisations and it’s importance will become even higher in the future. But it covers a multitude of areas so risk and insurance managers need to think carefully about what the key impacts of the agenda may be and how they can help their organisations respond.
So what sorts of questions should a risk manager or insurance officer be asking within their organisation? Are you aware of what your own organisation is doing in this area and are you part of the conversation and raising the right questions to understand the risks and support their mitigation?
What are the Pros and Cons?
There are clear environmental benefits of electric vehicles which is important as we move towards Carbon Net Zero by 2050, and it is likely you will also achieve lower fuel costs together with reputational benefit but on the other side of the assessment has to be the increased costs of purchase/lease of the vehicles, and they are also more expensive to repair currently. You will also have to consider things like additional electricity costs, the source of the electricity, the availability of charging infrastructure, the range of the vehicles, the charging times involved to keep the vehicles running.
Insurance Costs/Issues
At the moment, whilst electric vehicles/fleets are in their infancy, it is likely that motor insurance costs will increase rather than reduce, in view of the additional costs involved in repair or replacement (on average it will add £1k to accidental damage costs in the event of a claim). There are also additional areas to consider such as insurance for the batteries and the charging points.
If employees take vehicles home, will you install charging points at their home address? Is their home environmental suitable or will a cable have to be run out to the vehicle which may be parked on the street? Do you have to consider any Third Party Liability risks involved e.g. tripping hazards etc? Also, will there be any implications for the employee on their Home Insurance?
If vehicles are to be kept at depots or office sites, do you have charging infrastructure in place? Many organisations are adding charging points or even building new charging structures, sometimes powered by solar. Are you aware of these new additions across your assets and any implications for your other insurance lines?
Summary
The move to Electric fleets is a clear and positive development within the Sustainability and Environmental agendas and Zurich Municipal are supportive of these initiatives. There are risks that need to be managed to ensure that your organisation can achieve maximum benefit from such a change. As a risk manager you can assist in this area and this article has highlighted some of the issues to help the debate within your organisation. Below are a few of the key questions that you may ask to get involved in the debate and demonstrate the value you bring to it.
Some Key Questions for Electric Fleets
- Is your organisation considering moving to an All Electric fleet?
- Will it be an immediate move to All Electric or a phased in over time?
- Has the Fleet Manager discussed the risk and insurance issues with you?
- Insurance costs are likely to rise – has that been factored into the cost benefit analysis?
- Are you installing charging infrastructure on your sites? If yes, what are the risks/implications of that?
- Are you installing charging points in employee homes? If yes, what are the risks/implications of that?
- Are there any contractual terms that you need to be aware of if the vehicles are leased?
- Potential Additional Insurance
- Do you need to insure the charging points? Where are the charging points – in depots, on the street, at employees’ homes?
- Do you require cover for batteries?
- If you arrange cover with a deductible, have you considered the effect on the insurance fund of those self insured costs?
- Have you spoken with your insurers about the issues? e.g.
- Are they aware you have moved/are moving to electric vehicles?
- If you have Replacement Vehicles as part of the cover, can an electric vehicle be provided within the timescales in the SLA?
