Is your Business Ready to go Electric?

Insuring electric vehicles

Is your Business Ready to go Electric? Insuring electric vehicles

If you were recently stuck in a queue for petrol or diesel, you may be forgiven for casting an envious eye at those owning electric vehicles. With this is mind, you might think now is the time to be going electric – whether this be company cars, buses, vans, taxis or other vehicles, is something to consider with less than nine years before petrol and diesel car sales end. This article weighs up the pros and cons of going electric from an insurance perspective, while also taking into account other financial factors.

The Expense

This is, understandably, a key concern for businesses. With the financial challenges the pandemic has posed, choosing smart investments is a priority. So how costly is insurance for electric vehicles compared to petrol or diesel? The short answer is that electric car insurance is more expensive. The reasons for this are:

  • Lack of historic data: Because electric cars are still relatively new, insurers have had difficulty calculating the cost of repairs, leading to cautious predictions and raised premiums. It is hoped, however, that as time goes on this will be subject to change.
  • Electric car mechanics are still few and far between: Another issue with being so new, there are considerably less mechanics trained in electric car repairs which makes it harder to shop around for a competitive price. Electric car mechanics, however, are on the rise.

The demand for electric cars is rapidly increasing. The Department of transport reports that 2020 saw an increase of 125% of ultra-low emission vehicles (ULEVs) registered from 2019* and more electric vehicles were registered than diesel cars for the second month in a row in July, according to car industry figures.* The increase in sales has led to an increase in data for insurers which, over time, creates the potential for a decrease in insurance costs. CLICK HERE and HERE

View more information on vehicle licensing statistics.

View more information on electric vehicle sales overtaking diesel.

According to EDF energy, electric vehicles are likely to cost you less over the course of ownership. Electricity costs much less than petrol or diesel and electric cars require less maintenance than a petrol or diesel car. 

The government has also pledged £500 million to supporting the rollout of fast charging points, with the aim that drivers will never be more than 30 miles from a rapid charging station.* The financial incentive to buy electric vehicles is therefore still strong, despite the likely increased insurance costs compared to petrol or diesel vehicles. 

View more information on the costs of electric cars.

The increase in electric cars on the road has also given more insurers the confidence to enter the market, which it is hoped will eventually lead to a greater chance to shop around for competitive prices.

Why electric vehicle insurance is likely to start to come down in price:

  • Their engine. With electric cars, there are few complex moving parts that are at risk of being damaged.
  • The battery pack. The most expensive part of the car, the battery, is well protected in the event of an accident, reducing the likelihood of a costly replacement.
  • With less complex engines, claims costs should come down too.
  • Increasing expertise. More and more mechanics are developing the expertise to fix electric cars, Wrexham College has even begun a course dedicated to it.

The insurance process

From a customer and insurer perspective, getting fleet insurance for electric vehicles is the same as insuring a normal vehicle.

The market, however, is smaller and not every insurer will provide fleet insurance for electric vehicles. As the market for electric becomes more popular, however, this is subject to change. For those that currently do insure electric vehicles, they may impose additional terms and conditions depending on its value, for example, they may require a tracker to be fitted.

Being clear on what’s covered is also important, additional equipment like power cables may not be included so it’s vital you check your insurance policy.

In some instances, when you buy or lease an electric vehicle, they may require you to lease the battery. It is therefore important to establish if separate battery insurance is necessary for accident damage or theft; this should be something the company you lease the battery from can help you with.

The future is electric

The verdict is that insurance is still more expensive for electric vehicles. This is due to a currently small and cautious market and less expertise for electric, however, this is changing. It may be that within the next few years electric car insurance prices will come down, and likely become cheaper as the 2030 deadline looms.

Factoring in the insurance cost, alongside other costs, efficiencies and practicalities it is important to know what is right for your business. For example, for fleets that rack up the miles, businesses need to look into the practicality of charging times and the frequency of charging points in their travel journeys.

With us all, insurers, consumers and garages alike, getting used to an increased presence of electric vehicles on the road, the future certainly is electric. For businesses, it just depends how soon that future may come to you.