A recent survey by The Green Insurer has revealed that 36% of motorists would be more likely to switch from petrol or diesel vehicles to electric cars if the 12% Insurance Premium Tax (IPT) on car insurance for electric vehicles were to be removed.
However, 52% of respondents indicated that this change would not influence their decision to switch, while 11% already drive electric or hybrid vehicles and could potentially benefit from reduced insurance premiums.
The Insurance Premium Tax is a government levy applied to all general insurance premiums. Over the past decade, the IPT rate has doubled from 6% to 12%, generating £8.15 billion for the Government in the last financial year.
The survey highlighted concerns among motorists regarding the financial impact of switching to electric vehicles (EVs). Sixty per cent of respondents cited the higher upfront cost of EVs compared to petrol or diesel models as a key reason for not considering an electric or hybrid vehicle for their next purchase.
Other financial barriers identified included the potential future cost of battery replacement (52%), concerns over servicing expenses (34%), and the belief that electric car insurance premiums could be higher (23%).
Paul Baxter (pictured above), CEO of The Green Insurer, commented on the findings, referencing the Labour Party’s commitment to reinstate the 2030 ban on the sale of new petrol and diesel cars.
“Our latest findings indicate that lower insurance costs would also encourage and incentivise some motorists to make the switch from traditional petrol and diesel vehicles to EVs,” Baxter said. “We acknowledge that the idea of reducing some of the revenue generated from Insurance Premium Tax may be unpalatable in the current economic climate, however, we are convinced that more short-term action such as this is needed to help accelerate EV take-up, which is in line with the new government’s goal to combat climate change.”
The survey also reflected broader public support for lowering insurance costs for eco-friendly drivers. Earlier research conducted by The Green Insurer found that 62% of UK adults were in favour of reducing insurance costs for those choosing greener vehicles.
The Green Insurer has partnered with up to 70 companies, including major UK supermarkets such as ASDA, Tesco, Sainsbury’s, and Morrisons, to offer discounts and rewards to policyholders.
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