Toronto, Ontario — A recent Forbes Advisor report found that EV insurance rates are approximately $100(USD) more expensive annually than similar builds and models of gas-powered vehicles.
This information comes amidst significant increases in EV ownership. With gas prices at all-time highs and an increased focus on environmental impact, electric vehicles are being touted by many as the way of the future. With this, however, comes expense increases not seen in related gas-powered vehicles.
This analysis of data comes from Quadrant Information Services. It indicates that the insurance premium for EVs is $1,889 on average annually versus $1,786 for the ICE equivalent.
This is reportedly related to the higher cost of EV repairs, as passed on by insurance providers to customers. “If your electric car model has a history of expensive and/or frequent claims, insurance rates for all owners of the model will generally be higher.”
Another reason for the higher rates deals with the “specialized training” relating to these vehicles. Due to the complex construction and design of EVs, the training required to fix them is often seen as an obstacle for insurers.
Ryan Mandell, director of claims performance for Mitchell’s Auto Physical Damage unit, comments, “It’s really important to understand that an EV is not just an electrified variant of an internal combustion engine vehicle—it really is something totally different.”
“Even though…the vehicles may look similar, the architecture is totally different and unique,” says Mandell.
Furthermore, parts themselves are often more expensive in electric vehicles, costing an of average 2.7 percent more than an ICE vehicle. EV batteries can also cost between $5,000-$15,000 if a replacement is needed. This, again, raises concerns about the cost of these vehicles for insurers.
The EV market still holds a small percentage of actual cars on roads. However, the increased popularity of EVs within the U.S. and Canada indicates the potential for increased insurance expenses.
“As sales ramp further, claim and repair volumes will grow, so understanding how EVs will change things like frequency, costs, cycle time, and repair requirements is important,” reads a CCC report.
For further information, read the full report here.