What SMEs should know about insuring EVs
While Electric Vehicles (EVs) can help your Small to Medium Enterprise (SME) enjoy lower operating costs while promoting a more sustainable future, EV insurance can be more expensive than Internal Combustion Engine Vehicle (ICEV) insurance. There are also a few unique EV risks and factors that businesses should be aware of when taking out insurance.
Why is the cost of insuring an electric car generally higher compared to other vehicles?
Factors that can raise the cost of EV insurance premiums include:
- Higher vehicle price tags: High-value cars generally cost more to insure, and EVs generally cost much more to buy than their ICEV equivalents.
- Less access to parts and labour: Repairing an EV often costs more than an ICEV, as fewer qualified technicians and repair centres may be available, and replacement parts may need to be sourced from overseas. Higher repair costs can increase the cost of claims, and therefore the cost of premiums.
- Unknown risks: EVs are relatively new technology and not all of their risks are well known to insurers. Depending on an insurer’s risk appetite, this could increase the cost of their premiums.
How much does it cost to insure an electric vehicle?
EV insurance will be affected by most of the same factors as ICEV insurance, such as the car’s make and model, its age, how far it regularly drives, where and how it is garaged, and the driver’s safety record.
But because EVs generally cost more to buy than ICEV equivalents, their insurance premiums can be higher on average.
For example, according to The Post, premiums for an 2023 MG ZS EV are around 41% higher than for an 2023 ICE MG ZS.
What should SMEs look for in electric vehicle insurance?
While EV prices and insurance premiums may be higher than those of some ICEVs, this may change in time as EVs become more commonplace and more EV infrastructure is rolled out. Becoming an early adopter could potentially pay off for your SME as EV technology improves.
When comparing EV insurance for SMEs, you may want to consider:
- Covering the full value: Even if you buy an EV at a discount thanks to government rebates or incentives, you may want to insure it for its original price in case of a total loss claim.
- Battery cover: Repairing or replacing an EV battery following an insured event may not always be covered.
- Accidental damage cover: EVs may be more vulnerable to some minor accidents than ICEVs, such as when mounting the kerb damages a floor-mounted EV battery.
- Towing and roadside assistance: Towing an EV could risk damaging the engine if the wheels are forced to turn. Check that the EV insurance policy covers proper care and transportation after a breakdown or accident.
- Charging infrastructure cover: Some EV insurance policies may also cover loss or accidental damage to the EV’s battery pack, charging cables, wall boxes and adapters.
- Comparing quotes from different insurers before making any decisions can help you get the most value for money. An insurance broker may be able to assess the risks to your business and what needs to be covered by your EV insurance.
Risks
Some specific EV insurance risks could include:
- Fire: Damaged EV batteries can experience thermal runaway; a combined battery fire and flammable gas leak, which can be difficult to extinguish. While relatively rare, one battery fire could potentially spread if a fleet of EVs are garaged together, raising the injury and property damage risk.
- Electric shocks: High voltage batteries and chargers could potentially cause serious injury if damaged or used incorrectly.
- Public liability: EV charging cables stretched over pedestrian areas could lead to trips and falls, especially in public areas.
- Cyber risks: EVs and chargers connected to the internet risk being compromised by hackers.
Obligations
SMEs investing in EVs may also need to consider additional obligations alongside their insurance.
For example, if a business buys an EV for an employee’s use as a company car, will the employee be able to charge the car at home? This could be affected by:
- Access to off-street parking
- If the employee owns or rents their home
- If it’s a house or a unit
You may offer to arrange installation of charging infrastructure at your employee’s home, and/or to reimburse the employee for the electricity they use to recharge their work vehicle. This could require installing a dedicated sub-meter or smart charger to track power use.
You may also need to discuss with your insurance broker if the charger will be covered by the employer’s insurance, or the employee’s home insurance policy (if they have one).
Can you replace an EV battery without replacing a car?
Is it viable to do it for the company, can you get them?
The battery may be an EV’s most expensive component. While an EV battery should last the vehicle’s lifetime, if damaged they could cost tens of thousands of dollars to replace.
Additionally, some EV designs integrate the battery into the vehicle’s structure, meaning they cannot be easily removed or replaced if damaged.
In some cases, the high cost of a replacement battery, plus the removal and installation charges from repairers, could lead some insurers to write off an EV after relatively minor damage, even if the car is still new.
However, this could potentially change in time as more affordable and more easily replaceable EV batteries are developed. Also, some EV insurance policies may include specialist cover EV batteries, which could offer SMEs some peace of mind.
Call us on 0800 376 304 or complete our commercial vehicle insurance enquiry form today.
