Insurance

Published on February 22nd, 2017 | by admin

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What is Electric Car Insurance?

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Surely electric car insurance is just ‘normal insurance but for electric cars’? So, what is there to debate?

A legacy of confusion

Unfortunately, it’s just not quite that straightforward.

In theory, it should be routine and nothing to think twice about for those familiar with the basics of conventional car cover. If you understand the concepts of third party fire and theft cover versus say fully comprehensive, then that should be enough – at least you might think.

In practice though, the position here was and is the cause of confusion and sometimes headaches for some owners of electric cars or vehicles (often abbreviated to ‘EVs’). Insurance problems arose because EVs started to arrive on the marketplace relatively quickly and to some extent caught many conventional car insurance providers on the hop.

Suddenly, from being a niche product often regarded as being slightly ‘eccentric’, EVs and hybrids started to pour onto the UK’s roads in very large numbers. By the end of 2016, some figures put the number of such vehicles on the road at around 85,000.

Why the conventional car insurance industry was caught out

One of the big EV problems that plague some of the conventional insurers is that they’re desperately short of data.

That’s because many insurers base their pricing (called the premium) on their understanding of the risks associated with a given type of vehicle.  In the case of say a 2-litre diesel car, they can look back perhaps 40 years and see all the accident and claim statistics for such vehicles. They can then add that claims history into their assessment of the risk of insuring you as a type of driver and the result, roughly speaking, is the premium.

That’s what they use to offer and market their policies.

So, you can perhaps see their problem when EVs started to arrive in larger numbers – they had no accident and claims history to base their pricing and marketing on!

The market responds

As is the case in almost any business sector, some companies respond faster to change than others.

It’s possible to describe the current electric car insurance providers as coming into one of three categories:

  • those that are still struggling to come to terms with this evolutionary change and as a result, they’re not offering cover for EVs at all;
  • some who have reacted by providing cover for a few specific EV risks (e.g. trips and falls over charging cables) but who have also cranked up their premiums considerably due to not knowing what else to do;
  • a select number of specialist providers of electric car insurance have produced viable and typically cost-effective cover designed specifically for the electric car. Those policies are ‘ready to go’ and can be tailored to meet your and your vehicle’s own unique needs.

How this affects you

If you’ve just made the switch to an EV or hybrid, you’re going to perhaps face the situation that your conventional insurer may not offer such cover at all or if they do, it may come with a surprising price tag.

If you’re willing to pay whatever they ask, then fine. If not, it might be sensible to contact a specialist insurer who knows EVs and their cover inside-out.


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