Are electric car owners exploited by insurers?

Why is electric car insurance so expensive?

The question on many electric car owners minds is why is our electric car insurance so expensive?

In a recent article on HonestJohn.co.uk he calls for the government to abolish Insurance Premium Tax on 100% electric cars. There are other incentives available to encourage uptake as explained in our government grant guide.

In research the article states that electric cars are up to 60% more to insure than their petrol equivalents.

Latest statistics from January to June 2018 show that electric car registrations are down by over 3% year on year.

Drop in 100% electric registrations

Data from the Society of Motor Manufacturers and Traders (SMMT) show that there were more than 1.2 million petrol and diesel cars registered between January and June 2018, yet just 7441 electric cars left showrooms over the same six months, raising a serious question: What needs to be done to increase EV demand with UK buyers?

High list prices, range anxiety and limited access to charging points have all been routinely blamed but the issue of highly charged insurance premiums has been quietly ignored.

“If the government is serious about getting more people into genuine zero-emission electric vehicles, rather than plug-in hybrids, then there needs to be decisive action,” said HonestJohn.co.uk Managing Editor, Dan Powell. “And the government itself holds the key. At present, it takes 12% off every motor insurance premium in IPT. If it removed IPT on electric car insurance, then premiums would instantly drop. This would improve the incentive for buyers to swap their diesel or petrol for pure electric.”

HonestJohn.co.uk‘s analysis of the insurance market revealed that electric car insurance carries a hefty premium when it comes to comprehensive cover. Some models are up to 60% more expensive to insure than their petrol or diesel counterparts.

Young professionals targeted

To make matters worse, it is young professionals, the target buyers for most EVs being hardest hit. Some insurers are demanding more than £1,800 for a years’ cover.

“On the one hand electric vehicles tend to be smaller and less powerful. However, they also need specialist parts and skills to repair so may cost more to insure in some cases.” Stated a spokesperson for the Association of British Insurers. “Drivers can expect pressure on insurance premiums to reduce as the technology becomes more widespread”.

After receiving complaints from HonestJohn.co.uk readers about the unaffordable cost of electric car insurance, the website analysed the market to see what a typical driver can expect to pay for a comprehensive 12 month policy.

A test quote on similar models and car manufacturers from Confused.com found a female driver aged between 30 and 55 who had no motoring convictions showed that a petrol car with a comprehensive motor insurance policy was £567. Meanwhile it was £607 for a diesel car and £751 for an electric vehicle. The same quote for a male aged under 25 showed the average annual insurance policy would cost £1484 for a petrol car. More expensive was £1592 for a diesel and a then whopping £1854 for an electric vehicle.

Delve into the numbers at GoCompare for a professional in their 30s and the costs for insurance drop. But the price disparity grows. For example, a 35-year-old accountant living in a city with five years’ no claims can expect to pay £247. When it comes to insuring a 2015 Renault Clio petrol. A similar fully comprehensive quote for the same firm’s electric Zoe is £395. 60% higher than the Clio, despite the fact that both are similar priced and equipped.

Typical Premiums for a used car*

*Based on GoCompare average quotes on a 2015 car, a 35-year old accountant from Bristol, with five year’s NCB. Quotes obtained July 2018.