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Here’s how owning an electric vehicle can affect your insurance

Here’s how owning an electric vehicle can affect your insurance

Electric vehicles (EVs) are still a tiny part of the South African car market, but that’s about to change as global interest in EVs surges and government fast-tracks plans to create a thriving local EV industry.

In South Africa, there are only an estimated 1,500 EVs on our roads, with high prices and a lack of charging infrastructure remaining major inhibitors to the uptake of this technology. But government has bold plans to drive the sale of new energy vehicles and create a vibrant manufacturing industry for EVs and their components, which could see the country rapidly pivot towards the electrification of private and public transport vehicles.

It’s part of a global boom in EVs, which last week saw car rental giant Hertz order 100,000 Teslas to electrify its rental fleet. In the UK, the government has announced a ban on the sale of all petrol and diesel vehicles after 2030, which will see more than 6.5 million consumers set to buy EVs in the short term. And Japan now has more EV recharge points (40,000) than filling stations (35.000).

But how will buying an electric car affect your insurance? Wynand van Vuuren, client experience partner at King Price Insurance, says there are two areas to look out for: The price of the vehicle, and the need to ensure that home charging infrastructure is compliant.

“If you have an EV, your insurance experience will be similar to that of a conventional vehicle. You’ll probably pay a bit more to insure an EV, because it’s more expensive than your average vehicle, and they cost more to repair than conventional cars. But the standard factors, like your age, claims history and where you live will still be the biggest determining factors of your personal risk,” said Van Vuuren.

By the same token, the theft risk for an EV could drop, especially in the early days of EV adoption, as they will be both difficult to steal and hard to dispose of.

The bigger change would be if you choose to install charging equipment at your home. This type of equipment will have to be installed professionally and connected to the building’s power grid, and will have to be noted on your policy schedule to ensure that issues like power surges are covered.

“This will have an impact on your buildings insurance, and you should preferably discuss this with your insurer or broker before you install any charging equipment at a residence,” said Van Vuuren.

The bigger trend of interest to the insurance industry is that mobility patterns – and how we own cars – are changing, says Van Vuuren. People are increasingly able to get around without their own cars, especially if they live in urban areas. At the same time, younger generations simply don’t see cars as status symbols in the same way that older generations do: They see them as a way of getting from A to B.

“There’s no doubt that EVs are going to become a way of life in South Africa sooner than we think. But ultimately, changing ownership patterns will have a greater impact on the insurance industry than EVs,” said Van Vuuren.

 

 

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