electric vehicles: what you need to know
Times are changing. No more than five years ago, seeing a Tesla driving alongside the freeway was considered a rarity. Today, drivers are surrounded by E-vehicles (electric vehicles or EVs) day in and day out.
Considering the new wave of electric vehicles, what do you need to know about insuring these vehicles? Is there anything additional to consider? Let’s discuss.
what is an electric vehicle?
An electric vehicle sometimes called an E-vehicle or EV, is an automobile that operates on an electric motor* rather than an internal-combustion engine powered by fuel and gasses.
EVs are known for being quieter, without exhaust emissions, and produce fewer emissions overall.
the e-vehicle market continues to grow
The electric vehicle market has expanded beyond Tesla, with many other automobile manufacturers contributing to the E-vehicle wave.
Electric vehicles are here to stay—and the statistics prove it. Back in 2012, a mere 120,000 electric cars were sold worldwide. Jump forward less than ten years ahead to 2021, and more than 120,000 E-vehicles were sold in one week, according to the International Energy Agency.
This, however, brings us to an interesting question: What insurance considerations should you make when purchasing or leasing an E-vehicle?
insurance elements to consider when owning an electric vehicle
The biggest thing to note about electric vehicles and insurance coverage is that EVs can be more difficult to insure compared to a standard, gas-powered car.
Why is this? There are three reasons. E-vehicles face:
- High damage and repair-related exposures
- Increased coverage costs
- A shrinking pool of potential carriers
Let’s discuss each in a little more detail.
high damage and repair-related exposures
Electric vehicles face extremely high damage and repair-related exposures. Although there are significantly fewer moving parts in an EV, their equipment is much more complex than in a gas-powered vehicle; meaning that it will likely cost more to repair or replace the EV if an accident occurs.
increased coverage costs
As far as insurance goes, high damage and repair-related exposures mean increased rates for policyholders with comprehensive and collision coverage.
a shrinking pool of potential carriers
Although EVs are increasing in popularity, electric vehicles still make up a relatively small portion of the automobile market today. Carriers are mindful of the risks of insuring an E-vehicle, including high damage and repair-related exposure, and liability exposures.
This considered, the number of potential carriers to insure your E-vehicle is fewer than would be for traditional vehicles.
a final word
As E-vehicles continue to increase in popularity, as will the need for carriers and insureds to understand the differences in insuring E-vehicles vs. traditional gas-powered vehicles.
Interested in learning about e-bike insurance coverage? Read on in our article “e-bike insurance coverage: what you need to know.”
*An EV is not to be confused with a hybrid. The primary difference between the two is an electric car runs exclusively on battery-stored electric energy whereas a hybrid runs on a combination of electricity and conventional fuel.