It’s hard these days to turn on the TV or scroll through a news site without seeing mention of electric vehicles – plus new brands, autonomous trucks and infrastructure upgrades to current offerings. Electric vehicles (EVs) are dominating the automotive headlines and for good reason.
Between 2020 and 2021, sales of new electric vehicles nearly doubled. By the end of 2022, EVs will comprise over 5% of all vehicles on US highways.
What’s driving this demand? Most purchasers of EVs are consumers and business owners concerned with reducing their impact on the environment. However, increased vehicle options, advanced drivetrain technologies, tighter emission standards and competitive pricing are also boosting sales.
An important aspect of this trend, which shows no sign of slowing, is insurance coverage. Despite assistive technology and a full suite of bells and whistles, drivers still need adequate insurance.
Here are some answers to common questions and misperceptions about insuring your EV:
Can I get insurance for my EV?
Yes! All the major carriers offer coverage for EVs. In fact, coverages are virtually identical to those offered to owners of internal combustion engines.
An EV doesn’t burn gas so insurance must be less expensive, right?
Not necessarily. In fact, premiums on EVs are, for the time being, more expensive than gasoline-powered cars.
Why does it cost more to insure EVs?
This is primarily for two reasons: first, the average replacement cost of a new EV is greater than a new gasoline-powered car. Second, it is more expensive to repair advanced battery packs and drivetrain technologies should they become damaged in an accident.
How much more expensive?
According to a study by Value Penguin, the average annual insurance premium on an EV is approximately 25% more than a gas-powered car. Of course, that depends on the driver, his or her driving record and the vehicle’s annual mileage.
Will rates change?
Most likely. As more and more drivers own EVs and parts and labor become more standardized, repair costs should stabilize or even drop. Carrier competition will also help drive savings. What’s yet to be seen is whether or not EV owners drive fewer miles than internal combustion owners (annual mileage is another key factor in premium costs).
What other factors may affect rates?
Cybersecurity is a big question for insurers. EV technology is developing rapidly and interconnectivity to infrastructure and the internet presents the opportunity for cyber intrusion. The advent of autonomous vehicles (AVs) presents another big question for underwriters: will AVs be safer for their drivers and others? And, ongoing supply chain disruption and EV battery life raise additional issues, especially when considering parts availability and repair costs.
Should I still buy an EV?
You’re in the driver’s seat! Cost is not always the key determining factor. EV technology continues to advance at a rapid pace and the repair and recharging infrastructure is advancing as well. Manufacturers are scrambling to introduce new model options. Look for the insurance industry to keep pace with innovative products that meet the specific needs of EV owners.
Oakbridge can help put together a comprehensive coverage plan for your vehicles, whether it’s a new electric sedan for the family or a fleet of hybrid trucks for your business. Our advisors have been meeting the ever-changing needs of our clients for decades. Let us help guide you through these exciting technological advances.
We’re Oakbridge. Rooted in the past to better serve the future.