Are insurance premiums higher for electric and hybrid vehicles?
Sales of hybrid and electric vehicles (EVs) have boomed in recent years. This could have an impact on auto insurance premiums in Canada. Rates are already starting to rise, and drivers of these vehicles can expect to pay more for insurance.
Insurance companies will have no choice but to adjust their pricing as EV-related claims data becomes available.
Aside from this boom, why do insurance premiums seem to be higher for electric and hybrid vehicles?
Lack of qualified mechanics
First, these vehicles are more expensive to repair, and insurance companies have to pay for parts that are more expensive.
Second, there are still too few technicians who can make these repairs. There is a real need for qualified mechanics to repair these vehicles.
Insurance companies are currently working with manufacturers and dealers to create training programs for electric vehicle mechanics and repair technicians.
This creates delays, which in turn extends the rental period for replacement vehicles. This contributes to higher costs and may explain why insurance premiums for electric vehicles are higher.
Expensive parts
These vehicles are expensive to purchase, and when they need repair, parts are hard to come by, lengthening delivery times.
The cost of the batteries alone can exceed the cost of a new electric vehicle. Some insurers will sometimes write off cars with little or no other damage.
Sometimes these higher claim costs are not related to the fact that the vehicle is electric, but rather to the technology built into the vehicle. For example, the camera on the windshield console acts as part of the vehicle’s intelligent cruise control system. Such technology can make repairs both more complicated and more expensive.
On average, repairs similar to those on a gas-powered vehicle can increase costs by 10%, 15% and sometimes even 20%.
However, some consumers have a more nuanced view of the situation.
According to some, the fact that insurance premiums for electric vehicles are more expensive can be offset by savings in fuel consumption and maintenance costs.
What about Canada?
The Canadian auto insurance market is highly regulated by provincial governments. This may help mitigate the impact of price increases, but prices are still likely to rise gradually.
Currently, there aren’t enough of these vehicles in the Canadian market for consumers to see a significant change in their premiums. It is estimated that such changes will be felt within 5 to 10 years as more people replace their old vehicles.
Find out more!
The increase in insurance premiums for electric and hybrid vehicles in Canada reflects the unique challenges insurers face in an evolving automotive sector.
The transition to appropriate pricing will take time. Regulators will play a key role in ensuring that auto insurance premium increases remain reasonable and gradual for Canadian drivers.
At Malouin Assurance, we encourage you to stay informed. Check your premiums with your insurer. And if you have any questions, don’t hesitate to contact us!
