With the world moving onto greener, more environmentally friendly pastures, interest and hype around electric cars continues growing.
According to AutoTrader’s 2022 guide, data showing the demand for EVs demonstrated an increase of interest by 159% (EV Advert Views Year-on-Year).
An incredible feat given the year before, South Africans conducted more than 540 000 searches for EVs on its platform.
Questions have also arisen – some include insurance costs for these vehicles.
For instance, questions surrounding cost.
In most cases, electric cars are more expensive to insure than traditional ICE (internal combustion engine) cars due to the cost of replacement parts and spares.
To learn more about the costs that make EVs pricier than petrol-powered cars, you need to consider coverage and cost differences, repair and maintenance differences, battery-related costs and charging station coverage.
Coverage Differences
Some coverage options remain the same whether your vehicle’s a gas-guzzling machine or an electronic invention.
Comprehensive and liability coverage options are recommended for all road users.
Both insurance options offer protection should you be at fault for a collision-related accident.
Comprehensive coverage goes above and beyond by covering non-collision-related events.
Liability coverage for electric and petrol cars doesn’t differ much.
As for comprehensive coverage, electric cars have expensive components and therefore require higher coverage limits, making insurance more costly than petrol-powered cars.
EVs also differ in their unique components requiring unique coverage; some insurance policies cover the car’s battery, including repair and replacement costs in case of damage or failure.
Another coverage type that traditional ICE (internal combustion engine) vehicles don’t have is the inclusion of charging stations.
Cover includes damage to the charging station or any injuries that may occur while using it.
The differences between EVs and petrol-powered cars mean that insurance providers must develop a unique approach to assessing insurance risk tailored to suit EVs and fuel cars.
Electric cars are typically more costly to insure due to the cost of parts and specialised labour, making them more expensive to repair.
However, they are considered safer than fuel-driven vehicles given the fewer moving parts and that they’re less likely to catch fire in an accident.
Insurance providers will examine common factors such as the vehicle owner’s driving habits and history, age and location.
Insurers use this information to paint a picture of the type of driver an individual is, how much risk their environment and behaviour causes and the likelihood of them getting into an accident.
Also, unlike fuel-powered motors, EVs have a limited range which, for drivers, could mean one of two things; driving in congested areas may increase the risk of accidents, or drivers may become more cautious, making for safer driving habits.
So an individual’s driving habits will play a part in how an insurer assesses their risk.
Cost Differences
The cost of insuring electric cars versus petrol-powered vehicles varies depending on numerous factors.
One such factor is the cost of the vehicle. However, insurance companies also consider safety features when determining the cost of insurance.
Vehicles fitted with safety features, like instant torque, may impact the likelihood and severity of accidents.
This feature is commonly found in EVs.
Electric cars also have different driving habits than fuel-powered vehicles, e.g. regenerative braking and longer range on a single charge, which insurers pay attention to when considering costs.
And as mentioned earlier, unlike their petrol-powered counterparts, EVs are made up of expensive parts that require expensive maintenance, repairs and replacement.
All of these play a part in how an insurer will assess a vehicle’s risk and, subsequently, determine a policy’s premium.
Insurance companies will look at claims that have been paid for similar cars, among other things, and set their prices.
So if your car’s model has a history of expensive or frequent claims, premiums for all model owners will generally be higher.
EVs tend to be more expensive than ICE vehicles, are more vulnerable to damage, and are more likely to need total replacement rather than repairs when they are damaged.
Given the newness of the electric car market, there are few part suppliers, meaning a non-competitive market, leading to costlier parts.
But it’s not all doom and gloom for EV owners.
Some insurance providers offer special discounts and incentives for using a charging station that’s part of their network.
In contrast, others may offer lower premiums for your eco-friendly vehicle.
Repair and Maintenance Differences
The upside of having fewer moving parts in an EV compared to traditional motor vehicles comes with the downside of being costly.
A damaged battery pack demands specific safety protocols be performed. Often, most repair shops lack the skilled manpower trained to fix the problem, making for an expensive repair bill.
Electric cars require regular upkeep, just like combustion engine vehicles, but the type of maintenance and repairs can differ.
Here are some of the most common EV maintenance and repairs.
Battery replacement
For instance, EVs depend significantly on a large battery pack to power the car, so it’s essential to maintain the battery’s condition. This includes frequent checkups to ensure it’s charged and appropriately discharged, maintaining longevity.
Additionally, the average lifespan of a battery is between 8 to 15 years, or even 20 depending on the conditions of use.
After that, it must be replaced as it’s a vital component.
Brake maintenance
EVs also use regenerative braking (a feature of electric cars that uses kinetic energy to slow down), which is more durable than conventional brake pads.
However, they’re still susceptible to wearing down.
You must check and replace old and worn-out brake pads and rotors to avoid malfunctioning, like warped rotors.
Charging system maintenance
Another integral part of an EV is its charging system, so it’s crucial to ensure it continues working as it should.
The charging system includes the battery, the alternator, and the voltage regulator. Should any of these components fail, it can affect how well the car charges.
Charging system maintenance includes checking the charging cables, port, and associated software or hardware.
Software updates
EV’s heavy reliance on software to control its various systems, i.e. the battery, charging, and motor, means software updates are a central part of the maintenance needed.
Manufacturers often release software updates to fix bugs, improve performance, and add new features.
So, regular software updates can help ensure your electric car runs smoothly and efficiently.
Motor maintenance
Despite having fewer parts, EVs still need motor maintenance.
This includes checking for signs of wear and tear, replacing brushes or bearings (a “bearing” facilitates movement between two parts while reducing friction) as necessary, and keeping the motor clean.
Tyre replacement
A flat tyre can be a common occurrence, regardless of the type of vehicle you drive.
Electric cars, however, are typically heavier than their petrol-powered counterparts due to the weight of the battery pack, causing more wear on the tyres.
They also run with instant torque due to their battery-powered mechanism, which can place more strain on the tyres.
Regular tyre rotations and replacements can help extend the life of the tyres.
Insurance companies may charge higher premiums on EVs due to the above maintenance requirements; remember, they don’t come cheap.
However, you’re less likely to perform maintenance and repairs on an EV with the same frequency as a petrol-powered car.
To top it off, advanced safety features, like collision avoidance systems and lane departure warnings, may offset some of these costs.
Battery-Related Issues
Electric car batteries offer a host of benefits, including improved performance, reduced emissions, and lower operating costs, to name a few.
However, there are also a few unique risks and challenges.
Fire:
Although EVs are less likely to catch fire in an accident than a fuel-powered vehicle, however, should they catch fire, the results can be disastrous.
EV batteries contain a lot of energy; in the event of a crash, the battery pack can be damaged, releasing flammable chemicals.
Fires from an EV are notoriously difficult to put out and burn at a much hotter temperature than petrol cars.
Thermal management:
EV batteries must be kept within a specific temperature range to maintain performance and prevent damage.
Should the battery get too hot or cold, it can cause swift degradation, reducing range and poor performance.
Proper thermal management systems are essential to keeping the battery at the right temperature.
Battery life:
And as for the battery pack, the lifespan of one is a primary concern for owners, as they’re costly to replace.
Several things can affect battery life, such as temperature, charging habits and driving style.
To help extend the lifespan of a battery, regular maintenance and proper charging are the way to go.
Electric car batteries may experience degradation with time, resulting in reduced range and performance.
Therefore, some insurance policies may cover battery replacement if the battery degrades beyond a certain threshold.
However, this type of coverage may be limited or only available for a certain period after purchasing the vehicle.
Regarding fire and explosions, some policies may cover this risk and extend coverage to include liability on the off chance the battery causes damage to other cars or property.
Not to mention the potential environmental catastrophe EV batteries can cause.
The toxic chemicals in the battery can be harmful if not properly disposed of, causing environmental damage.
Due to this, some insurance policies offer coverage for environmental damage caused by the battery or the vehicle.
Insurance coverage for electric car batteries can be more expensive than traditional car batteries due to the higher replacement cost and the potential for additional risks.
Understanding these risks is crucial when insuring an electric car.
Insurance policies should be tailored to an owner's unique needs to ensure adequate coverage in case of any accidents or incidents.
And as electric cars become more common, insurance companies will likely continue to develop specialised policies considering these vehicles' unique characteristics.
Charging Station Coverage
Threats to your car aren’t solely limited to the roads you travel on; a charging station poses its own risk.
Public charging stations may be exposed to all kinds of harsh weather conditions or vandalism, causing the charging equipment to malfunction.
This can negatively affect an EV’s battery or electrical system.
They also require significant electrical power to operate, so faulty wiring or other electric hazard increases the risk of an electric shock or fire.
Not to mention the security risk a person exposes themselves to by using these facilities.
Risks include:
- The disruption of operations.
- Theft of sensitive customer information (payment information and fraudulent payments).
- The takeover of charger networks for use as bots in distributed denial-of-service (DDoS) attacks.
And you can add theft to this ever-growing list of risks.
The value of EV charging equipment is relatively high. It can attract thieves who attempt to steal or damage the charging stations.
To mitigate these risks, insurance providers have to answer questions such as how insurance coverage addresses these risks and who might be held liable in the event of an incident.
In the event of an incident, liability for any damages or injuries can be complex and depend on various factors, including the cause and responsibility of the involved parties.
And in terms of the damages arising from malfunctioning charging equipment or electric hazards, most insurers will cover these events without much hassle.
However, security risks from identity theft or robbery from waiting in line to use the charging station can be tricker to insure.
Insurance providers may stipulate specific conditions or limits for coverage.
The availability of public charging stations can impact your driving experience and the cost of the coverage.
Areas with limited charging infrastructure may pose a higher risk of theft or damage due to range anxiety, longer travel times, difficulty finding a place to recharge, and extremely long waiting times waiting for other vehicles to be charged.
Thus, understanding all these challenges can help you choose the coverage that best aligns with your needs, protects you from all the above risks, and helps you know how to charge and use your car effectively.
In a nutshell
Both have four wheels, a metal body and several shiny and exciting accessories. Yet, the difference between electric vehicles and internal combustion engine cars is stark.
The most significant difference is, of course, the price.
Generally, EVs have a higher purchase price and require specialised parts and repair services, making them costly to own and insure.
Most car insurance policies were created before the invention of EVs, so naturally, they are better suited to petrol-powered vehicles.
But, more and more insurance providers are offering specific coverage options for electric cars, such as charging stations or battery replacement.
Additionally, some electric car manufacturers provide their own insurance plans, including tailor-made coverage for EVs.
EVs also typically demand less maintenance than petrol-powered cars, which could result in lower insurance premiums.
However, unlike conventional cars, their specialised parts, software system and battery pack may increase insurance premiums.
But there are also discounts for environmentally-friendly vehicles, including electric cars.
EV owners may be eligible for specific incentives, which can lower the cost of ownership and potentially impact premiums.
Lastly, many EVs have more safety features than petrol-powered cars, which insurers may take into account when determining premiums.
In conclusion, understanding the key differences between insuring an electric car versus a fuel-driven car is essential when choosing insurance coverage for your vehicle.
EVs have unique features and risks to consider when selecting insurance coverage, including charging infrastructure, battery maintenance, and specialised repair needs.
Insurance companies may also offer different coverage options for electric cars, such as coverage for charging stations or battery replacement.
Understanding these differences and working with an insurance provider specialising in electric car insurance ensures you have the coverage you need to protect your investment and enjoy your electric car with peace of mind.
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Pineapple (FSP 48650) is underwritten by Old Mutual Alternative Risk Transfer Insure Limited, a licensed Non-Life Insurer and authorised FSP. T&Cs apply. Premium is risk profile dependent.
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