The insurance considerations for electric vehicles
02/28/2021
The Department for Transport (DfT) has recently announced that the Electric Vehicle Homecharge Scheme (EVHS), which provides up to £350 towards a chargepoint, will continue next year and be expanded to target people in rented and leasehold accommodation.
As well as this, the Workplace Charging Scheme will be opened up to SMEs and the charity sector, providing a much needed boost as a when people begin to return to the office. Transport Minister Rachel Maclean said, “Whether you’re on the school run or travelling to work, or don’t have access to a private parking space, today’s announcement will bring us one step closer to building and operating a public chargepoint network that is affordable, reliable and accessible for all drivers. As the UK accelerates towards net-zero emissions by 2050, we are determined to deliver a world-leading electric vehicle charging network, as we build back greener and support economic growth across the country.”
This announcement comes quickly off the back of £20 million in funding announced for councils to improve the on-street parking infrastructure in their local areas, as part of a suite of measures the government is taking to accelerate electric vehicle uptake.
Since the beginning of the scheme, over 140 local authority projects have benefitted which has seen applications for nearly 4,000 charge points across the UK. This funding could double that number, adding an additional 4,000 charge points in our towns and cities, helping to tackle the poor air quality and support economic growth as we look to build back greener from Covid-19.
What this means for insurance
As with any emerging risk, there are both expected and unexpected exposures that arise. This is no different for EVs and one aspect is inevitable; if the vehicles are more expensive then the subsequent damage claims will be more expensive, subsequently higher insurance premiums.
EV Repair costs and timing
There are several aspects that contribute to the increased cost of repairs for EVs. Unique to EVs is that when any repair work is undertaken on one it is necessary to decommission the battery to ensure that the vehicle is safe to work on and this can take up to an hour.
With new vehicles, and particularly new manufacturers, there is an increased risk of repair delays as a result of limited availability of new parts or unexpected issues being encountered with the repair. Not only could this increase the cost of labour charges but also any subsequent credit hire if a third party vehicle is involved in a road traffic accident.
“EV Noise” - AVAS
By virtue of not having a combustion engine, EVs are considerably quieter than other vehicles, which can pose an increased risk to other road users. In July 2019, European legislation made it mandatory for all manufacturers to install Acoustic Vehicle Alerting Systems (AVAS) in all new vehicles from July 2021. This system will make a continuous noise if the EV is driving at low speed (20km/h or less), significantly reducing the risk to individuals that are visually impaired.
Perceived fire risk?
It is often thought that the presence of highly flammable lithium in an EV battery means they present a greater fire risk than an ICE vehicle. This was further exacerbated by early media coverage of a handful of EVs igniting when involved in road traffic accidents. Subsequently a study was conducted in the USA which found that EVs actually present a lower fire risk than ICES2 and subsequent statistics appear to have verified this.
For more insight into the increase in the electric vehicle market, and what it may mean for insurance, click here to download our report.
