Why auto insurance concerns might hinder electric vehicle adoption
As governments gear up for a national push toward electric vehicles (EVs), Canadians are harbouring anxieties about their auto insurance policies.
Seventy eight per cent of Canadians are concerned about the cost of their insurance premiums on an electric vehicle, according to a recent BrokerLink survey.
This number differs provincially. For example, 94% of respondents in Atlantic Canada highlighted this concern, while only 68% expressed concern in Quebec. In Ontario, 78% are concerned, while 82% in B.C. shared the same anxieties.
The federal government is aiming for 60% of car sales to be EVs by 2030, with all sales being electric by 2035. In B.C., the provincial government recently announced its latest ambition — to have 100% of vehicle sales be electric by 2035.
The survey revealed 71% of Canadians who own gas-powered cars are reluctant to give them up. And yet, 59% of Canadians who don’t currently have an EV are excited to drive one in the future.
As to whether consumers are right to be concerned about the cost of their premiums on an EV, it depends.
The type of car driven is only one among many factors insurers consider when writing a policy, Grant Clarke, vice president, national personal insurance at BrokerLink, told Canadian Underwriter.
“Auto insurance rates can vary even among people who live in the same place and drive the same automobile,” he said. “It’s a very personal number these days, and many factors go into determining auto insurance rates.
“Pricing is unique based on where you live, your age, the year, make, or model of the vehicle, your past claims, the mileage driven, driving experience, insurance history — it really is a unique number.”
But coverage for electric vehicles doesn’t materially differ from gas-powered cars, he explained.
“Where we’ve seen the subtle differences emerge early on is with respect to endorsements, or perks, offered by different companies,” Clarke said. “For example, some companies will offer a discount for an environmentally friendly or an electric vehicle, or roadside assistance in the event the vehicle ends up needing a charge on the road.”
With that, more than half (54%) of Canadians said they will only consider switching to an insurance provider that offers specialized EV coverage if the premiums are competitive, Brokerlink shared in an email with Canadian Underwriter.
Meanwhile, just 24% of Canadians are currently familiar with EV insurance policies, while 20% don’t expect that a policy would have any specific benefits related to EVs.
When asked about the expected benefits from an EV auto insurance policy, respondents said:
Coverage for battery-related repairs (60%)
Coverage for charging equipment or infrastructure (53%)
Additional coverage for specialized EV components (52%)
Lower insurance premiums compared to gasoline-powered cars (46%)
“Our survey suggests that the consumers in Canada have limited knowledge about auto insurance policies for electric vehicles, and more education and support is needed to empower them in their transition to EVs,” Clarke said.
Brokers can support customers by keeping them up to date on auto insurance policies and regulations.
It will require brokers to continuously monitor government updates as more provinces roll out EV adoption expectations.
Feature image by iStock.com/BirdImages
