What is going on with electric vehicle insurance?

Data from Howden showed drivers of electric vehicles were paying more than double for insurance as those who own petrol cars at the end of 2023.

The average insurance premium for EVs soared to £1,344 at the end of last year, which is about twice the cost of insuring a petrol-fuelled vehicle.

According to Andrew Ballard, product principal of LexisNexis Risk Solutions, the main factor pushing up EV insurance prices was the cost of fixing these vehicles, which was 25.5% greater and took 14% longer than the equivalent repairs for petrol and diesel cars.

During the podcast, David Pearce, director of Axa Retail Direct, said an uptick in the purchase price of new EVs also pushed up premiums in the last 12 months.

Pearce said: “We started with EV insurance prices probably being too low. As insurers we have been trying to gather data to help inform future pricing. That [information] has meant prices overall [for EVs] have risen faster.

We get money back on internal combustion engine vehicles. To dispose of a battery costs money. We are paying a total loss valuation plus an additional amount of money to dispose of a battery.

Nick Kelsall, head of motor claims at Allianz Commercial

“We also started with electric vehicles that were quite small, like the Nissan Leaf and equivalents. Now we are seeing a rising trend in larger SUV vehicles and these start with prices of £50,000 to £70,000 when you are buying new.”

Nick Kelsall, head of motor claims at Allianz Commercial, said his company was engaged with Thatcham on how to accelerate repairing batteries, growing the repair network with EV capabilities and exploring the gap in the salvage market in a bid to tackle increased EV premiums.

He said: “Where there is total loss with these [we have asked] what are we doing with the batteries? How are we recycling and replacing batteries so that doesn’t become an additional layer of cost?

“We get money back on internal combustion engine vehicles. To dispose of a battery costs money. We are paying a total loss valuation plus an additional amount of money to dispose of a battery.”

The podcast also features Pete Allchorne, partner at DAC Beachcroft, and Paul Baxter, CEO of The Green Insurer, talking about what it will take to educate consumers on the cost of EVs over the lifespan of the vehicle, increase competition among car insurers plus whether manufacturers like Tesla could soon give insurers a run for their money.

As well as being able to listen to the podcast by clicking on the player above, you can also download and keep this episode of the Insurance Post Podcast to listen to anytime, anywhere you want to.

To download the episode, go to your podcast provider of choice (Apple, Google, Samsung, Spotify, Audible) and search for Insurance Post.