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Insurance and EVs: what you need to know

Are EVs more expensive to insure than petrol cars? We cut through the chatter to tell you what’s really going on – and what you can do about it

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There have been a lot of scare stories recently about EVs being more expensive to insure than petrol or diesel cars. We cut through what’s going on and what you can do about it.

In general, all motor insurance costs have been rising for a number of reasons as we reported here. New car prices have been steadily increasing, which means that premiums have increased to cover the values of the vehicles insured and used car values have been at historically high levels, which means that insurers have had to pay out much more in the event of a write-off.

But it is true that EVs cost more to insure. In July 2023 automotive risk intelligence company Thatcham Research – which is funded by the insurance industry – published a report funded by the UK government’s innovation agency (Innovate UK).

It found that all parts of the motor insurance claims process still need to adapt to EVs in the face of a ‘concerning lack of affordable or available repair solutions and post-accident diagnostics.’

Thatcham Research’s data showed that, in 2022, 9,400 vehicles were potentially involved in collisions resulting in battery inclusion in the repair. This is estimated to reach up to 260,000 vehicles annually by 2035.

BEV (battery electric vehicle) incident claims were 25.5% more expensive than their ICE (internal combustion engine) equivalents and could take 14% longer to repair, which means higher courtesy car costs.

What’s different about EVs?

For a start, they cost more new. It’s not always possible to compare like-for-like with a petrol car, but sometimes you can get close. A Vauxhall Corsa Electric currently starts at £32K for an entry-level model, while an equivalent petrol-powered Vauxhall Corsa with similar trim and performance is about £25K. The top-spec petrol Corsa Ultimate is about £28K. Similarly, the Kia Niro EV starts at about £37K while the petrol-electric hybrid Kia Niro tops out at £35K.

All EVs can accelerate rapidly, because an electric motor can deliver all of its power straight off with no gears. And with the weight of the battery, they are generally heavier than an equivalent petrol/diesel car so can do more damage when they hit something.

The majority of EVs have their battery in the centre of the car between front and rear wheels under the floor. This is good for the weight distribution and helps with boot space. In this position, they are also protected within what is called the passenger survival cell – a frame designed to protect you inside your car in the event of an impact. This gives excellent protection from front and rear impacts, but inevitably less so in side impacts as there is no bonnet or boot to absorb the impact.

All EV makers have made sure that the battery is thoroughly protected from impacts. As we’ve said before, it’s an urban myth the EVs catch fire more readily than petrol or diesel cars, although extinguishing the fire is more of a challenge.

An EV battery is made up of individual cells grouped together in packs inside a giant casing. But even though an impact may only bend a corner of a casing rather than doing any damage to the cells inside it, the default and very expensive option is to replace the entire thing because there isn’t yet enough knowledge or training to be able to open up a battery and transfer the contents to a new casing.

“Currently, the cost of a replacement BEV battery is causing a significant increase in the risk of ‘total loss’ or write-offs,” said Adrian Watson, head of engineering research at Thatcham Research. “The cost of EV batteries varies widely from high-end vehicles, currently costing £29,500, to the low-end costing £14,200. The ‘depreciation curve’ of battery cost versus average used value, shows that the cost of a replacement battery is more than the used price of the vehicle after only one year.”

As we’ve reported in features on warranty claims, training people to assess problems with EVs is taking time, and often the right equipment is lacking. Repairers might have limited access to battery diagnostics to enable a better understanding of battery health and potential repair options, and bodyshops need to make costly investments in specialised repair skills and equipment. “Without meaningful change, there is a strong likelihood that claims costs will continue to rise disproportionally,” Watson said.

EVs can also get hit by higher insurance costs because accident damaged cars need to be stored in a particular way, says Thatcham.

Government guidelines state that due to potential fire risk, damaged EVs awaiting repair should be stored in an outside quarantine area, at a safe distance of 15 metres from other nearby objects, so an outside storage space with capacity for 100 petrol/diesel cars would allow for the safe quarantine of just two EVs its says, severely reducing the amount of EVs which a repairer can work on.

The report stated that the cost incurred through following recommended quarantine protocols of 48 hours will add a minimum of £60 to every claim.

What sort of difference in premium are we talking?

We asked the insurance comparison site Compare the Market to look at the Vauxhall Corsa and Kia Niro models mentioned earlier in this article. It provided the average comprehensive car insurance premium paid for those models in October 2023.

Petrol version or hybrid versionElectric version
Vauxhall Corsa ultimate automatic – £880  Vauxhall Corsa e Design – £1,267
Kia Niro Hybrid 4 – £580Kia Niro EV 2 – £602  

It’s also worth pointing out that the EV models are more expensive than the ICE versions, so you’d naturally expect the insurance premiums to be higher. While the difference for the Kia is minimal, the Corsa Electric is 43% dearer than the petrol version which is substantially more than the price difference between the two cars (about 14%).

Are Teslas worse than other brands?

In September 2023, The Guardian reported that some Tesla owners were being quoted £5,000 to insure their Tesla Model Ys or were simply refused cover. One owner told the paper that having insured his Model Y with Aviva for one year at renewal time the company sent a letter saying they were no longer prepared to cover the Model Y. No explanation was given from Aviva.

Other media joined in – as there’s usually quite an appetite for negative Tesla stories – but there’s no hard evidence to say that all Teslas will be hard to insure. Every premium quoted as an individual example will have depended on the circumstances and claims record of that particular driver.

Also, many Teslas are run as company cars, so are on fleet insurance policies. Coming out of any company car and going back to insuring privately can be a shock for any driver as they will not have built up a claims record.

We also asked Compare the Market for a couple of Tesla quotes. In October 2023 it found the average comprehensive premium paid for a Tesla Model 3 was £1,216 and a Model Y £1,463.

Insurance moves fast

The insurance market is fluid and premiums can change from month to month. If, at a particular time, a particular insurer feels that the payout costs on a specific model are getting too high for their own economics, they may refuse to take any more of that model on or quote a price which is likely to put people off.

This applies to crash damage and theft – some of us remember the times when insurers simply wouldn’t cover hot hatchbacks. But those decisions aren’t always permanent.

There are blips in insurance premiums. “As of October this year, the average car insurance premium for petrol-fuelled cars has surpassed the cost of insuring an electric vehicle,” says Julie Daniels, motor insurance expert at Compare the Market.

“Nevertheless, on average over the past few months, our data has shown electric vehicles are typically more expensive to insure than petrol or diesel cars. Car insurance for electric vehicles can be higher as these cars are often more expensive to purchase and therefore replace.

“It’s up to each insurer to decide which customers they want to insure. As some EV models could be considered high performance or attractive to potential car thieves, these vehicles may be more difficult to insure. In these circumstances, drivers may need to shop around for high-risk car insurance – sometimes called non-standard car insurance or specialist car insurance.”

There are specialist EV-only insurers, but Julie says these should not be necessary in future. “Most mainstream insurers now provide cover for EVs after integrating these cars into their quotation systems. This will benefit drivers as insuring an electric vehicle is essentially as straightforward as insuring a combustion-engine car.”

Same old advice – shop around

Electric vehicle insurance premiums will come down, but this needs to be quicker to encourage buyers who are thinking of switching. Meanwhile, if you want to get the best insurance premium for any car the best advice is still tom shop around every time your policy comes up for renewal. Based on online independent research by Consumer Intelligence during August 2023, 51% of customers could save up to £516 on their car insurance through Compare the Market.

Also, there are well-known tips to lower the cost of insuring any car such as paying a higher voluntary excess, parking off the road or lowering the mileage. If you can afford the whole premium but just not in one go, there is also the option of paying monthly, although this will make the overall cost higher.

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Russell Hayes
Russell Hayeshttps://amzn.to/3dga7y8
Russell Hayes’ early career was 14 years of motoring journalism in print, television and online. He worked for What Car? and Complete Car magazines, the BBC's original Top Gear programme and Channel 4's Driven. Since 2007 he has written motoring history books on subjects including Lotus, TVR, the Earls Court Motor Show, the Volkswagen Golf, Volkswagen Beetle and Bus and the original Aston Martin V8. Now a full-time author, two more books are in the pipeline for 2023 and 2024.