Philip Small had never paid more than £1,000 a year to insure his electric car so was shocked this month to be quoted as much as £8,932.
The 55-year-old had never had an accident and had not changed the terms of his policy on his Tesla Model X, which he bought in 2019. So he couldn’t understand why he was being quoted up to nine times more than last year.
‘I can’t see how these increases are justified,’ says Philip, who owns and runs London catering and events firm Philip Small Ltd and drives about 12,000 miles a year.
Premium price: Philip Small found his renewal had doubled and then when he shopped around was quoted up to a ninefold rise in cost of cover
All motorists have seen an increase in the cost of insuring their cars. But electric car owners are being hit hardest with many seeing off-the-scale rises.
Premiums on petrol and diesel cars have increased by 29 per cent, rising on average by £192 to £848, according to price comparison website Confused. However, insurance premiums for quotes on electric vehicles have jumped by £402 to £959 on average – an increase of 72 per cent.
Difficulties in sourcing parts for electric cars and a shortage in the number of garages and technicians able to repair these vehicles have driven up premiums, according to Andy Moody, founder of temporary car insurance website GoShorty.
Premiums are typically higher because electric vehicles tend to be more expensive to repair, costing a quarter more on average than with a petrol or diesel vehicle, according to Thatcham Research, a motor research group.
Moody says: ‘Crucially, not all repair centres are able to deal with these vehicles. They often have to be repaired using specialist kit and away from traditional vehicles, due the fire risk presented by vehicle batteries.
‘Spare parts supply can be limited and costly compared with traditional cars due to the smaller market size – which can prolong repair times and associated costs.’
But Philip Small says this doesn’t justify the sudden, dramatic rises to his insurance quotes.
The Tesla owner’s insurance bill was £700 a year when he bought the car in 2019 and it rose to £1,000 last year.
But when Philip went to renew his annual policy with his insurer, LV, this month, he was told his annual premiums would rise to more than £2,000.
Philip shopped around on comparison websites but was not able to find a better deal. One quote, offered by Tesco, was an eye-watering £8,932 a year.
He says: ‘With an electric car, you have a battery and some electrical components.
‘There is very little that can go wrong, unlike petrol or diesel cars where you’ve got the engine and exhausts. And it’s under warranty anyway.
‘Tesla gives you a four-year warranty, so if anything goes wrong it’ll deal with it and you won’t need to make a claim.’
When Philip asked LV why it had doubled the price of his policy this year, he was told it was hard to get hold of parts for Teslas and that only Tesla-approved workshops can do any repairs. There are only six approved repairers in London.
But insurance costs for electric vehicles are rising across the board. His wife’s electric Mini came up for renewal at the same time and her insurance bill rose from £450 to £732 – a 63 per cent increase.
Philip feels the benefits of owning an electric car are diminishing.
‘The tax benefits are being taken away and the congestion charge on electric cars comes in from 2025,’ he says. ‘Rising electricity prices means charging them is also more expensive.’
Moody, of GoShorty, says rapid technological progress has meant older cars are now worth significantly less than their original value. This may lead to more being written off in the case of damage, increasing potential losses for insurers.
Darryl Bowman, of Cuvva, another car insurance website specialising in temporary cover, says the battery can represent 20 to 40 per cent of the car’s overall value.
Damaged batteries may not always be replaceable, resulting in the entire car being written off.
Expensive: Rising insurance costs and the high price of electric cars mean they are still out of reach for many households
John Lewis has stopped offering insurance on electric cars, as the cost of repairs has soared.
The store’s financial business, John Lewis Financial Services, has temporarily paused sales for cover on battery-powered vehicles for both new customers and those renewing existing policies.
A spokesman says the group’s underwriter, Covea, has enforced the sales ban while it analyses risks and costs.
Moody warns that any further bans could fuel price increases, as remaining insurers react to reduced competition in the sector.
‘With so many insurers walking away from certain sectors, the ones remaining are now insuring more of the high risk and cost of these vehicles.
‘This will result in premiums increasing significantly again in the next 12 months, which may lead more people to sell their electric car – reducing value further.’
Rising insurance costs and the high price of electric cars mean they are still out of reach for many households.
However, insurance costs will fall when the stock of second-hand cars eventually increases, says Bowman of Cuvva.
He adds: ‘Since electric vehicles are relatively new, and fewer of them are on the road, replacing parts can be more challenging, unlike traditional cars, where parts are readily available.’
Steve Smith, 65, has been driving electric cars for the past eight years. When he bought his first Tesla, a Model S, back in 2015, he paid £500 a year in insurance.
Last year, at renewal he was quoted £422 for his Tesla Model 3 Performance that he bought in 2019.
However, this year, Steve’s insurer quoted him £1,531 – despite there being no change in his circumstances. He was able to secure a policy for £962 with another provider, but the shocking jump drove him to sell his Tesla.
He has bought a Toyota bZ4X instead – also an electric car. His premiums have now dropped to about £760 a year. Now retired, Steve was a police officer for 30 years and had advanced driving skills. He was later an insurance fraud investigator investigating ‘cash for crashes’. He says: ‘The insurance industry takes little notice of electric car developments. It’s easy to get repairs, but insurers think it will be difficult and costly.
‘I made a claim a couple of years ago when I was hit by an uninsured driver, but the repairs were all sorted within seven days.’
Thomas Winstone, a firefighter from South Wales, was told the insurance bill for his Tesla Model 3 Long Range would jump from £650 to £1,100 a year when his policy was due for renewal in September.
Thomas, 44, looked on comparison websites, but was given quotes for £2,000 to £3,000 – far higher than if he stayed with his existing insurer, Privilege.
Thomas called Admiral, the company that provides his home insurance, and was able to negotiate cover for his car costing £600.
He says: ‘Premiums should always go up because of inflation. But every insurer seems to be increasing them by different amounts, so you feel like you don’t really know what you’re actually being sold.’
Content source – www.soundhealthandlastingwealth.com
