The dawn of electric vehicles: Transforming the landscape of auto insurance – Part 2
The growing popularity of EVs will have a significant effect on several sectors of the automobile industry. What implications does this sharp rise in EV sales have for vehicle insurance then? Let’s look at the rise of EVs and what its implications for customers and auto insurance in Part Two.
Comparing insurance expenses: Electric vehicles vs. Gas-powered vehicles
Annual premium estimates from Quadrant Information Services were gathered in order to obtain additional understanding of EV insurance rates and how they differ from gas-powered car costs. The calculations were made using a driver who was 35 years old, had a spotless driving record, and good credit. The figures show expected premiums for comprehensive, collision, and comprehensive coverage as well as minimum-liability insurance for full coverage auto insurance policies.
For instance, the 2022 Nissan Altima and 2022 Honda CR-V are gas-powered vehicles whose typical yearly insurance rates are $2,263 and $1,808, respectively. In contrast, the 2023 Tesla Model S and 2023 Nissan Leaf S are both electric cars that will cost a driver $4,762 and $2,374, respectively.
The average cost of insurance for electric automobiles is also typically higher, though this depends on the make, model, and year of the car. In 2023, the average annual cost of full-coverage auto insurance nationwide will be $2,024. The coverage costs of the electric cars on this list range from 10% to 135% more than the national average.
Strategies for electric vehicle owners to reduce car insurance expenses
EV drivers will save money on standard automobile ownership expenses by not having to pay for gas or oil changes, but they can also reduce the cost of insurance by utilizing local, state, and federal rebate programs.
For example, at the state level, low-income Californians may be eligible for more than $30,000 in incentives toward the purchase of a new EV, and Colorado offers up to $8,000 in rebates for people who buy or lease an electric car. Many states have utility providers that provide discounts and other incentives to customers who install specific EV charging stations in their homes.
Federal tax benefits are also offered to owners of specific EV brands and models. A tax credit of up to $7,500 is available under the 2022 Inflation Reduction Act to individuals who buy an eligible electric vehicle (EV) with a battery capacity of at least seven kilowatt hours. The expiration date of this credit is December 2032.
Using the discounts on auto insurance that are offered by an insurer is a terrific method to save money in addition to credits and rebates. Many large insurance providers provide discounts to responsible drivers, multi-vehicle policyholders, and customers who combine auto and other policies. Lower premiums can also result from choosing a greater deductible, but doing so increases the amount of money drivers must pay out of pocket for repairs.
It will be more crucial than ever to compare auto insurance quotes from several companies because we anticipate some volatility in the price of electric vehicle insurance in the years to come. This is among the greatest ways for drivers of electric vehicles to locate coverage that meets their needs and is both inexpensive and of high quality.
The implications of electric vehicle (EV) growth on the insurance industry
With the rapid growth of the electric vehicle market, car insurance firms are already changing and there will definitely be more changes in the future. Insurance firms would likely need to change their underwriting methods and risk assessments to take into consideration the unique characteristics of EVs. Charge infrastructure, battery range, and the availability of authorized repair facilities are just a few of the variables that may affect premiums.
Elevated expenses associated with collision insurance
The costlier collision coverage will likely be the most noticeable impact EVs have on insurance. This kind of insurance covers the cost of repairs to your car in the event that you cause an accident.
Compared to traditional gas-powered cars, electric vehicles (EVs) require more expensive replacement parts and repairs. As was already established, this problem is even worse if an accident damages an electric vehicle’s battery. Insurance companies will have to control this risk by charging more for EV crash coverage.
Do you need extra insurance for home charging?
Another consideration for insurance providers is using a home charger for an electric car. For EVs, home charging involves two primary stages:
Level 1: Charge your electric car using the provided charger. Any standard 120V outlet can be used with it. Despite its convenience and ease of setup, level 1 charging requires more time than other charging techniques.
Level 2: You need to purchase individual chargers for your electric vehicle in order to employ this technique. Large equipment like laundry dryers require 240V outlets, which are also needed for level 2 charging. When compared to Level 1 charging, this method charges batteries three to seven times faster.
There are no further home modifications needed for Level 1 charging, which is a straightforward charging technique. Although adding a new 240V outlet is usually required for a Level 2 home-charging system, insurers do not require EV owners to get extra homeowners’ insurance. However, some insurance companies could require proof of the proper installation of the home charging equipment.
Enhanced training and fresh policies
As EVs become more and more common, auto insurance companies will need to adjust the way they operate. This is particularly valid in the case of assertions.
Additionally, there’s a strong likelihood that new categories of auto insurance plans will emerge to meet the needs of developing EVs. Insurance firms may develop new plans or increase coverage options tailored exclusively for EV owners as the market for electric vehicles grows, keeping a watch on the always changing trends in the electric car sector.
The EV revolution: Final thoughts
It is too early to tell how EVs will impact the auto insurance market. We do know, however, that as EV market share increases in the United States, insurers will need to modify coverage options and provide agents with the necessary training to manage EV-related claims with ease. Average premiums will probably level out as the market adjusts to the growing number of electric vehicles on the road, even if consumers are presently paying higher-than-average premiums to safeguard their electric cars and should continue to expect high expenses soon.