Electric vehicles (EVs) are becoming more commonplace each day thanks to innovative battery technology, marketing centered around climate change and fuel efficiency, and the fact that they are just plain cool. They are technological marvels that are advancing the world of automobiles. This also trickles down to electric vehicle insurance.
Function of Auto Insurance
The primary function of auto insurance is to protect you and your personal assets from a liability claim. The other main aspect of auto insurance is to repair or replace your vehicle (mandatory with a loan/lease, optional if you own the car outright). This is where the differences between gas combustion vehicles and electric vehicles really come into play. While electric vehicles allow you to avoid paying at the pump, they tend to be more expensive than their gas guzzling counterparts. When looking at a total loss, the insurance company is taking on a higher expense, which translates to higher premiums for an electric vehicle compared with a gas equivalent.
It is not just about replacing, there is the repair aspect as well. Electric vehicles make up less than 3% of the vehicles on the road. That means that locations and trained technicians are few and far between. Even at those locations, the diagnostics and additional labor required to repair these vehicles are significantly more when compared with a gas vehicle. These are all expense taken on by the insurance company when paying for a covered claim. In addition, since EVs are still relatively new and make up so little of the driver base, the availability of parts can be an issue as well, adding to the extended repair time.
Myles Holley, an insurance specialist at Barnum, notes that “Even purchasing an EV can present some challenges from the insurance side. The majority of new EVs are built from scratch, meaning the VIN associated with it is also brand new. A new VIN can take weeks or months before it verifies correctly with insurance companies. As a result, the initial premium for the vehicle can be more or less than what it should be. If it is more, you can always work with your agent or carrier to back-date the transaction to lessen your premium. However, if the premium is below where it should be, you can experience unexpected increases.
“Lastly, if you are planning on buying an electric vehicle, particularly if it is brand new and must be built, it is important to check with your insurance agent or company if your current carrier will even insure an EV. Some of the biggest names in the insurance world do not insure EVs, which means you either have to find a separate policy somewhere else, potentially losing multi-policy discounts, or have to shop your entire policy/package around to accommodate. Insurance carriers also have a cap on what they will pay for expensive vehicles.”
While electric vehicles are new and exciting and have great potential to save you money in several different ways, there are some important aspects to consider when it comes to insuring them. Before buying an EV, be sure to discuss it with your insurance agent or company about how it will impact your policies.