Electric vehicles (EVs) were once seen as the cleaner, cheaper, and – at least initially – easier-to-insure future of personal and commercial transport. Early adopters even enjoyed discounted insurance premiums.
But the honeymoon appears to be over. As EV penetration rises, so do the challenges insurers face in underwriting these tech-heavy, high-torque machines – especially when it comes to the rising costs of repair.
According to Yvan Berthou, head of motor group underwriting at Zurich Insurance Group, the market has already changed.
“Initially, it was not uncommon for EVs to receive premium discounts,” he said, “but this has shifted due to their unique risks and repair costs.”
At the heart of the pricing issue is the EV’s most expensive and complex component: the battery. Not only does it account for a significant portion of the vehicle’s value, but it introduces new risks.
“It is important to note that the likelihood of EV fires is not higher than that of ICE vehicles,” he said, but also added that “the concentration of value in the battery introduces unique risks, including the potential for increased fire severity due to thermal runway.”
Yet the battery is only one part of a growing puzzle. EVs are often newer models equipped with advanced driver-assistance systems (ADAS), which add both safety and cost complexity. Repairs involving sensors, radar units, and calibration are expensive – and often non-negotiable.
Supply chain fragility, Berthou says, further exacerbates the issue. Just-in-time manufacturing practices, which were efficient under stable conditions, can now contribute to delays in parts availability and longer repair timelines.
Even driving style plays a role. The instant torque and acceleration of EVs can be difficult for first-time drivers to manage, Berthou points out, which increases accident risk.
While EV repair costs tend to draw headlines, comparing them directly with internal combustion engine (ICE) vehicles can be misleading without considering key contextual factors, Berthou says.
Usage patterns, for instance, vary widely. Commercial fleets may favour EVs for their lower fuel and maintenance costs, which makes them a smart choice for high-mileage operations. Meanwhile, private owners often use EVs for shorter commutes or as secondary vehicles, resulting in below-average mileage that skews data on frequency and severity of claims.
Urban driving also plays a role. Many EVs are concentrated in cities where charging infrastructure is strongest – but so is traffic congestion. That increases the chance of minor collisions, making EVs appear more accident-prone per kilometre than their ICE counterparts.
“Urban driving... can lead to higher claim frequency because of traffic density. In addition, shorter trips, where collisions are more likely to occur at the beginning and end, can make EVs appear to have a higher incidence of accidents per mile driven,” he said.
On the flip side, some EV features actually reduce risk. GPS tracking helps deter theft, and the absence of catalytic converters eliminates a common theft target among ICE vehicles.
The big picture, Berthou says, is that while EV repairs can be expensive, repair costs are gradually converging with ICE vehicles as repair networks adapt, parts availability improves, and insurers refine their underwriting.
“Evidence on total loss rates for EVs compared to ICE vehicles is currently limited. This is primarily due to the relatively low number of total losses and modest EV penetration in the overall vehicle parc. As the EV market continues to grow and mature, the likelihood of total losses is expected to remain manageable and comparable to that of ICE vehicles,” he said.
With many EVs still relatively new, expensive, and packed with emerging technologies, Berthou says that brokers play a critical role in helping clients avoid coverage gaps and misunderstandings that can lead to unpleasant surprises at claim time.
“Brokers play a crucial role in helping customers navigate the complexities of insurance policies, particularly for EVs,” he said. “Given that the EV market is still growing, with many new and expensive vehicles on the road, it is essential for brokers to provide advice that avoids coverage gaps and unfulfilled customer expectations in the event of a claim.”
Brokers should highlight the need for solid comprehensive and collision coverage, since new EV drivers often go through a learning curve. Things like rapid acceleration or screen-heavy dashboards, he says, can be distracting and raise the risk of fender benders.
“Broad coverage for own damage ensures that these high-value vehicles are well-protected against a range of perils,” he said.
Brokers, he says, should also break down the EV-specific details clients might overlook – like what’s actually covered when it comes to the battery or charging gear. Most policies won’t cover everyday wear and tear, like battery drain over time or tire wear, but they might step in if there’s sudden battery failure or damage to charging equipment.
“Understanding these nuances is critical, as insurance product innovation means that comparisons between carriers are not always straightforward,” he said.
