U.K. Study Finds EV Insurance Carries Bigger Charge

Insurers in the U.K. are short-circuiting electric-vehicle sales by charging as much as 60% more than for their gasoline-powered equivalents, a consumer-advocacy group says.

This is causing a drop-off in demand for the cleanest and greenest cars on the roads, the consumer website HonestJohn.co.uk says in a statement.

It wants the government to scrap the 12% insurance premium tax (IPT) for EVs, saying first-half sales figures show EV deliveries fell more than 3% year-on-year to just 7,441 units.

HonestJohn.co.uk Managing Editor Dan Powell says high list prices, range anxiety and limited access to charging points have been routinely blamed, but the issue of high insurance premiums has been quietly ignored.

“If the government is serious about getting more people into genuine zero-emission electric vehicles, rather than plug-in hybrids, then there needs to be decisive action,” he says.

“And the government itself holds the key. If it removed IPT from pure EVs, then premiums would instantly drop, and this would improve the incentive for buyers to swap their diesel or petrol (vehicle) for pure electric.”

The website says young professionals, the target buyers for most EVs, are being hit hardest, with some insurers demanding more than £1,800 ($2,360) for 12 months’ coverage.

It found comprehensive car insurance for a gasoline vehicle for a female driver between 30 and 55 with no driving convictions cost £567 ($744). It was £607 ($795) for a diesel vehicle and £751 ($985) for an EV.

Running the same quote for a male under 25 revealed the average annual insurance policy would cost £1,484 ($1,947) for a gasoline car, £1,592 ($2,088) for a diesel and £1,854 ($2,432) for an EV.

The website quotes a spokesperson for the Association of British Insurers as saying EV repairs require specialized parts and skills, so the cars may cost more to insure. “But drivers can expect pressure on insurance premiums to reduce as the technology becomes more widespread,” the spokesperson says.

Powell says until people live with EVs, there’s a perception that owning one comes with a compromise.

“Many of these compromises have already been addressed – EVs have a good range, are quickly and easily charged and are getting cheaper to buy,” he says. “The government and insurance industries are doing the future of electromobility no favors at all, and this is something that requires immediate change.”