Australia’s transition to electric vehicles (EVs) continues to gather momentum and brokers are seeing more combustion engine car fleets make the switch.
In July this year the Electric Vehicle Council (EVC) reported that about 9% of all car sales in Australia were EVs. Car fleets, in particular, have experienced strong growth in EV numbers. As 2023 comes to an end, the EVC has estimated that there are 180,000 EVs on the roads.
However, according to the latest car census by the Australian Bureau of Statistics (ABS) there are more than 20 million registered motor vehicles in the country.
One reason, said Luke Kelly (pictured above), director of Fuse Fleet Underwriting, is insurance risks, including the expense of EVs and their repairs. Playing into this issue, said Kelly, is the relative immaturity of the EV market so insurers don’t usually have as much data as they’d like. This can make it difficult to price the insurance effectively.
As a result, insurance coverages for EVs can be expensive.
However, Kelly said, one way brokers and fleet managers can make efforts to control some of these costs is to be aware that different EV makes and models can have very different risk profiles.
Fuse Fleet provided a list of seven insurance factors brokers and fleet managers should keep in mind when looking to purchase EVs.
One of the main considerations when insuring electric vehicles is the potentially higher cost of repairs. EVs often come with specialised components like lithium-ion batteries, which can be pricey to replace or fix in case of damage.
Some makes and models might have limited access to replacement parts, especially for older or less popular EVs. This can affect both repair expenses and turnaround times.
Many electric vehicles are equipped with advanced technology and safety features, such as autonomous driving systems and sensors. While these features improve safety, they can also drive up costs for repairs or replacements, impacting insurance premiums.
Over time, the capacity of an electric vehicle’s battery can decline. Some insurance policies may need to account for factors related to battery lifespan and replacement expenses.
Insurance considerations might also relate to the availability of charging infrastructure. The accessibility of charging stations can affect the risk of running out of power and drivers potentially being involved in an accident.
Specific makes and models might have unique features or vulnerabilities that impact insurance rates. For instance, certain models could be more prone to theft or specific types of accidents.
The value of electric vehicles can fluctuate, and it’s crucial for insurance providers to accurately assess the current worth of the vehicle for coverage purposes.
Kelly wouldn’t comment on the risk profiles of specific EV makes or models. However, Insurance Business has found that some EV models have their charging port – an expensive component to repair – at the front.
For example, the MG ZS and other MG EVs charge at the front. This picture shows an MG ZS.
The Nissan LEAF, depicted here, also has its charging port at the front.
Could this be driving up the cost of insuring these vehicles? Or is there a reason for this placement of the charging port? Is it well protected from possible damage in car accidents? IB has reached out to MG and Nissan for comment.
According to the EVC, another issue playing into EV uptake is the availability of vehicles. However, news reports say Australia’s second biggest electric car brand, BYD is planning to open another 30 retail stores.
Another impediment to uptake and vehicle availability, said the EVC, is Australia, unlike other countries, lacking a New Vehicle Efficiency Standard. The EVC said this standard “ensures car manufacturers increase the supply of EVs.”
Are you a stakeholder in the EV market? How do you see the insurance and risk management situation? Please tell us below