Philip Small, owner of London catering and events firm Philip Small Ltd, was shocked when he received an insurance quote of £8,932 for his electric car this year. Despite never having an accident and making no changes to his policy, his premiums had increased ninefold compared to last year. This increase is not unique to Small, as many electric car owners have experienced significant rises in insurance costs.
The average premium for petrol and diesel cars has increased by 29%, rising by £192 to £848, according to price comparison website Confused. However, for electric vehicles, insurance premiums have jumped by £402 to £959 on average, an increase of 72%. Difficulties in sourcing parts for electric cars and a shortage of qualified technicians and repair garages have contributed to these higher premiums. Electric vehicles tend to be more expensive to repair, costing 25% more on average compared to traditional vehicles.
Andy Moody, founder of temporary car insurance website GoShorty, explains that not all repair centers are equipped to handle electric vehicles due to the fire risk presented by their batteries. This leads to longer repair times and higher costs. Despite these factors, Small argues that the significant increase in his insurance quotes is unwarranted. He points out that electric cars have fewer components that can go wrong and are covered under warranty.
Small’s wife also saw her insurance bill rise by 63% for her electric Mini. Rising electricity prices, the removal of tax benefits, and the introduction of congestion charges on electric cars have diminished the benefits of owning an electric vehicle in Small’s opinion. Other factors contributing to higher insurance costs include rapid technological progress, which has reduced the value of older electric cars and increased the likelihood of write-offs in the event of damage.
In some cases, insurers have stopped offering insurance on electric cars due to the escalating cost of repairs. John Lewis Financial Services, for example, has temporarily paused sales of insurance for battery-powered vehicles while it analyzes the risks and costs involved. Moody predicts that further bans could lead to price increases as the remaining insurers react to reduced competition. However, as the stock of second-hand electric cars increases, insurance costs are expected to decrease.
Steve Smith, who has been driving electric cars for the past eight years, experienced a surprising increase in his insurance premium for his Tesla. Despite no changes in his circumstances, his premiums rose from £422 to £1,531. This drove him to sell his Tesla and purchase a Toyota bZ4X instead, resulting in reduced premiums of around £760 per year.
Thomas Winstone, a firefighter from South Wales, faced a similar situation when his insurance for his Tesla Model 3 Long Range was due for renewal. His bill was set to increase from £650 to £1,100, with comparison website quotes ranging from £2,000 to £3,000. However, he was able to negotiate a cheaper policy through his home insurance provider, Admiral.
Overall, the rising costs of insuring electric vehicles, along with their higher purchase prices, continue to be a barrier for many households. The limited availability of parts, the need for specialist repair centers, and concerns over future repairs and replacements contribute to the higher premiums. However, as the market for electric cars grows and more second-hand options become available, insurance costs are expected to decrease.
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