Starting from April 1, electric vehicle (EV) owners will no longer be exempt from paying road tax. New rules will introduce a higher band of Vehicle Excise Duty (VED), with “the first-year rate for newly registered EVs expected to be just £10, rising to £190 annually”, as reported by The Independent.
Whether this will impact the rate of EV purchases remains uncertain, but it's clear that the EV market is rapidly evolving and many consumers are still navigating this transition.
According to a recent survey by the AA, “over 20% of drivers remain steadfast in their decision to never purchase an EV, citing concerns about government policies and infrastructure support,” The Times reported.
This uncertainty surrounding EVs emphasises the need for brokers to educate clients that are considering making the switch – and to offer clarity on an ever-evolving landscape.
According to Jon Dye, director of motor underwriting at QBE, “there's a responsibility of the brokers and the insurer to support, inform and educate clients.”
When it comes to insuring electric vehicles, brokers must consider the differences between EVs and traditional internal combustion engines. Dye said: “Think about the need to charge a vehicle, and you know, rather than just filling it up at a petrol station, there are now cables involved, etc.”
As Dye explains: "It’s making sure they've got the right protection around does the policy cover the cables or theft of the cables? If a vehicle is on charge overnight and somebody steals the cables, is there cover for that? If there’s damage to the home charger, then, depending on what caused the damage to the home charger, is that a motor risk, or is that a property risk? These are some things that may be covered in household insurance."
To properly address risk, brokers need to help clients understand how their electric vehicle behaves differently from traditional cars. Dye stresses the importance of education, stating, “there’s a lot around education, going back to the frequency aspect and EVs driving differently. It’s making sure that the drivers are trained and fully aware before they get into an electric vehicle, and they can understand how an electric vehicle behaves differently, and perhaps how they need to adapt their driving style.”
Brokers should also ensure that clients are informed about the repair costs associated with EVs. As early research from the ABI suggests, “electric vehicles are approximately 25% more expensive to repair than their petrol equivalents and take 14% longer to fix.”
Dye emphasised the importance of understanding repairability: "If an accident does occur, then from a broker and insurer perspective, certainly from an insurance perspective, make sure the insurer has got the right capabilities in terms of the repairability of that vehicle and the network of repairers to support the speedy repair of that vehicle."
Looking ahead, brokers need to stay informed as the EV industry continues to evolve. As Dye puts it: “We're all on a journey. We're all understanding a new technology, as new vehicles hit the roads... buses, coaches, lorries, cars, vans, special types, or cranes, you name it, police, ambulance, all of those different sectors are looking at, OK, from a sustainability perspective, what is possible?”
With new vehicle types and technology entering the market, brokers need to anticipate the future needs of their clients, and adapt coverage to the unique risks associated with each new development in the EV space.
If brokers remain proactive in offering education and providing the right coverage, they will be well-equipped to help their clients drive off into the sunset.
