Written by: Griffiths & Armour on: 15 Feb 2022
Managing your risk through the Electric Vehicle Revolution
Electric and hybrid plug in vehicles are becoming more commonplace on UK roads in part due to the social awareness of the environmental impact of petrol and diesel cars, tax benefits and the introduction of the ‘Plug-in car and van grants schemes’ along with various other incentives introduced by the UK Government.
There are an estimated 370,000 electric vehicles (EVs) on the road in the UK and 710,000 plug-in hybrids (PHEVs), with sales increasing by 76.3% in 2021. All new cars and vans sold in the UK must be fully electric by 2035. The UK Government is currently on course to ban the sale of new cars and vans powered entirely by petrol and diesel by 2030 and ban the sale of new hybrid vehicles by 2035.
Similarly, sales are likely to increase significantly over the coming years as new regulations mean all new residential buildings from 2022 will require a charging station to be installed.
Tesla have led the way in manufacturing EVs with the first model produced in 2009, however due to the ‘premium’ status of the vehicles, increased costs to replace parts, intellectual property issues and limited authorised repair garages, only a small number of insurers were able to initially offer coverage. Those that did applied a higher premium compared to traditional vehicles, often with combined higher excesses and young driver exclusions.
The introduction of new EVs from different manufacturers and increased availability of risk data for analysis meant a change of approach and appetite from the insurance market giving EV owners access to more competitive terms.
The comparatively higher costs involved repairing EVs does still bring higher premium considerations, but insurers are now also looking to widen the scope of their offerings to include items such as the charging points, cables, and damage to batteries not caused by a road traffic accident.
Future concerns remain the stability of lithium batteries, spare parts availability and supply chain issues, and cyber matters such as hacking into the vehicle’s controls. However, the motor insurance market is embracing the changing landscape of fleet vehicle make-up to look to match the risks to the coverage.
A future challenge will be the insurance markets considerations towards the introduction of vehicles powered by hydrogen cells, and whilst learnings will be transferrable from electric vehicle underwriting, coverage for these vehicles will not be as prevalent for some time.
What are the proactive steps I can take to risk manage an electric motor fleet?
For businesses currently using EV’s or considering the transition towards a fully EV fleet, environmental responsibilities and reducing the risks associated with polluting the environment is certainly one key motivational factor, but like any motor vehicle, EV’s do nevertheless bring about their own risks. With that in mind, the Risk Management team at Griffiths & Armour have highlighted important considerations for any business with an EV or considering purchasing a vehicle of this type in future which you can read in their article: Electric Vehicles – The New Norm, With New Risks.
What are the key considerations when switching your fleet to electric vehicles?
From the perspective of a business owner, there are still likely to be many questions as you consider the transition from a diesel and petrol powered fleet to fully electric. A common question raised which seems to be on the minds of most organisations is whether adequate charging infrastructure is going to be in place. The country is undoubtedly talking more about EV adoption, and multi-award winning, carbon neutral business, Ground Control are one of those organisations leading the charge with their own EV fleet transition and creating the infrastructure to service this demand. You can find out about Ground Control and their impressive journey towards a 100% EV fleet by reading our interview with Tom Goodman, Senior Operations Manager at Ground Control in our article titled: The Costs, Challenges and Benefits of Operating an Electric Fleet
What is the current position of insurers when dealing with accidents, total losses or other key claims considerations involving Electric Vehicles?
As a business owner with a fleet of vehicles that you may transition to EV or a private car owner considering purchase of an EV, you may want to know what is the current position of insurers is when it comes to dealing with accidents, total losses or other key claims considerations involving EVs you own, now or in the future? To help answer this question, the team at Griffiths & Armour have consulted with several market leading insurers to check their position. The positive news is most insurers have made significant progress in relation to dealing with customer claims for EVs. You can read the findings of our research into the position of insurers in our article titled: Accidents, Repair Costs and Total Losses of an Electric Vehicle – The Insurer Position
If you found the contents of this article interesting or have a question regarding any risk management or insurance related matters for an Electric Vehicle Fleet, please get in touch with Jack Wolstencroft or your main point of contact at Griffiths & Armour.
If you found this article interesting, you may wish to read the following related content;
Electric Vehicles – The New Norm, With New Risks
The Costs, Challenges and Benefits of Operating an Electric Vehicle Fleet
Accidents, Repair Costs and Total Losses of an Electric Vehicle – The Insurer Position