Are you thinking of buying or insurance an electrical car? Find out if it will influence your monthly insurance costs here.
The insurance industry in South Africa is dynamic and competitive, making it possible for insurers to offer customised policies for different needs. Niche products like electric car insurance policies are becoming more popular. With the rise of the use of electric motors, the costs of comprehensive insurance are coming into the limelight.
Does Owning an Electric Vehicle Affect My Car Insurance Rates?
Yes, electric car insurance is more expensive than insuring a car that runs on an internal combustion engine at the moment. But, according to one of the founders of Naked Insurance, this could change in the future. To understand why it is more expensive right now, and how it could become cheaper in the future, it is important to understand how insurance companies calculate your premiums.
How Do Insurance Providers Calculate Costs for Insurance Policies?
Insurers set up a risk profile for you and your conventional vehicle, and the same is true for an electric vehicle model. This profile consists of various elements, such as the cost of the vehicle, the type of vehicle, availability and expense of parts, your place of residence, your age, and even your driving history.
Your insurance premiums are automatically more expensive if the car you buy is expensive. That means, for the time being, that electric vehicles will cost more to insure. Because they cost a lot to buy. Below are a few examples of the values of current electrical vehicles.
|Volvo XC40 P8 RECHARGE
|Mini Cooper SE
|Mini Cooper SE
|Jaguar i-PACE S
|Jaguar iPACE S
|BMW i3s REX
Another reasons electric vehicles currently cost more to insure is because it would be more difficult to source parts after accidental damage than for a conventional petrol or diesel vehicle. As they become more common, this could change. Electric car owners can expect to see their car insurance prices become lower as the electric car market flourishes.
At the same time, EVs often have fewer parts that would need to be replaced. This could reduce maintenance costs and eventually make insurance cheaper, too. The average premium of regular car insurance is, however, currently lower than electric vehicle insurance.
Is the Future of Electric Vehicle Insurance Expensive?
Many insurance companies are predicting that an electric motor insurance policy will become more affordable in the future. Since the electric vehicle evolution is in its infancy, it’s logical to expect massive changes as the market grows. In fact, Ernest North from Naked Insurance predicts that cover for mid-range electric vehicles will lower within the next two years.
He bases his prediction on observations within their company and the marketplace. More users are searching for an EV insurance quote. At the same time, Google searches for electric vehicles have risen by more than 100% in South Africa in the last year.
Mainstream insurance companies are seeing an increase in insurance quotes for electric cars, but the numbers are still small compared to regular petrol cars or vehicles with diesel engines. For example, more than 6.75 million regular cars were sold in 2021, compared with dozens of units of EVs in annual sales.
Factors Insurers Think Will Lower the Cost of Electric Car Cover in the Future
1. Growth of the electric and hybrid vehicle market. As more vehicle manufacturers take a sustainable approach to vehicle manufacturing, hybrid vehicles and electric cars will become more common.2. Lower prices of EVs compared to conventional cars in the future. At the moment, EVs are rare and produced at great cost. They are expensive to import, and expensive to own. But, as more manufacturers start producing EVs, the prices could go down.
3. Greater availability and affordability of EV parts in the future. Currently, the costs of spares are high because these vehicles are rarer in South Africa. This also pushes up vehicle ownership costs.
4. The current enhanced vehicle safety features of EVs. Careful drivers with a good driving history often pay less for their insurance because their personal risk profile is more amenable. The safety features of electric cars can help you get into fewer accidents and get a better risk profile. This could lead to lower monthly insurance payments.
5. More frequently available public charging station points. The electric vehicle revolution does not line up with energy independence. Drivers are limited by where charging points are available on the road. At the moment, your breakdown cover may cost more, since it is easy to run out of energy on the road without a nearby charging station.
6. Sustainability of EVs can reduce extra cost. For example, petrol and diesel cars are subject to stiffer carbon taxes. The sustainable nature of electric cars can reduce the typical costs of ownership and may eventually affect annual premiums, too.
Future generations are very likely to enjoy low insurance costs for EVs. In the meantime, if you want to go the electric car route, you should know that premiums are not sky high. You can get a free quote with no obligations from reliable insurers for your EV by filling in the form at the top of this page.