Automotive insurers in Britain have refuted allegations of profiteering following a massive 50 percent increase in the cost of insuring electric vehicles in 2023. As a result, drivers in the country are now paying nearly double the insurance premiums compared to owners of internal combustion engine (ICE) vehicles.
Insurers respond that there’s little they can do, and that the premiums are determined by claim costs and frequency. They say that accidental damage claims on EVs are 35 percent more expensive than comparable repairs for combustion engine vehicles.
Insurance premiums for EVs surged to an average of £1,344 (approximately US$1,700 at current exchange rates) at the end of 2023, reports Bloomberg. Insurers point to several factors contributing to this increase, including the elevated cost of repairs, a shortage of mechanics trained in EV servicing, and extended garage time for these vehicles.
“You’ve got length of repair times going up, you’ve got the cost of the component parts going up, and you probably see more EVs written off because residual values are particularly low at the moment,” Carl Shuker, Howden Group Holding’s CEO for the UK and Ireland.
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The high insurance rates are putting pressure on the EV market, which is showing signs of a slowdown. Europe, including the UK, is experiencing a cost of living crisis, while the growth of charging infrastructure is stagnating.
Although the Tesla Model Y was the top-selling vehicle overall in Europe in 2023, the EV market share did not grow in the UK for the first time in recent years. It is also noteworthy that the American crossover was the only fully electric model in the top 30 of the continent’s sales charts. That’s particularly relevant here, as studies have found that Tesla EVs cost more to fix than most other electric models, which tend to be only marginally more expensive to fix than combustion vehicles.