Rising Electric Vehicle Claims. What You Need to Know!
As the popularity of electric vehicles (EVs) continues to grow, so too does the complexity and cost associated with insuring them. A recent report by Mitchell highlights some crucial trends that every EV owner should be aware of, especially when it comes to the financial implications of repairs after a collision.
The Rising Cost of EV Repairs
According to the report, electric vehicles cost an average of $1,576 more to repair after a collision compared to their fossil fuel counterparts. This represents a significant 31% difference, with battery electric vehicles (BEVs) costing an average of $6,534 to repair, compared to $4,958 for cars with internal combustion engines (ICEs). These figures emphasize the importance of understanding the potential costs involved in owning an EV, particularly when it comes to insurance coverage.
Increasing Claims Frequency
The frequency of claims for EVs is also on the rise. In Canada, claims frequency for EVs increased by 3.94% year-over-year, marking a 39% rise. This uptick is occurring despite a slight dip in battery EV sales, which dropped to 9.2% of all vehicles purchased in the second quarter, down from 10% at the end of 2023. Whether this decline in sales is temporary or indicative of a broader shift in consumer sentiment remains to be seen.
Hybrid Vehicles: A Growing Trend
While BEV sales may have dipped slightly, sales of mild and plug-in hybrid electric vehicles have surged by 69.7% compared to the end of 2023. Mild hybrids, which use small electric generators to improve fuel efficiency and reduce emissions, are becoming increasingly popular. However, like BEVs, these vehicles can also be costlier to repair after a collision compared to traditional ICE vehicles.
The Impact on Insurance Claims
Claims costs vary depending on the type of electric vehicle. For instance, mild hybrid electric vehicles (MHEVs) cost an average of $5,302 to repair, while plug-in hybrid electric vehicles (PHEVs), which rely on both a large high-voltage battery and a secondary ICE, cost closer to $5,665 to repair. These higher repair costs can significantly impact insurance premiums and claims.
Regional Differences in Claims Frequency
Geographically, British Columbia and Quebec lead Canada in the frequency of repairable claims for EVs, with rates of 7.07% and 5.14%, respectively. While these figures represent a less than one percent increase since the end of 2023, they highlight the regional variability in EV ownership and related claims.
Total Losses: EVs vs. ICE Vehicles
Interestingly, the rate at which EVs are written off as total losses after a collision is slightly lower than that of newer ICE vehicles. Canadian BEVs were deemed a total loss 7.24% of the time, down 3% from Q1 2024 but up 44% from Q2 2023. In contrast, newer ICE vehicles were written off 8.52% of the time. This suggests that while EVs may be more expensive to repair, they are not necessarily more likely to be totaled after an accident.
What This Means for EV Owners
As an EV owner, it's essential to be aware of these trends and understand how they could impact your insurance costs and claims experience. While the initial investment in an EV can be higher, especially with the potential for increased repair costs, the long-term benefits in terms of fuel savings and environmental impact can be significant.
At Why Worry Risk Management, we specialize in helping you navigate the complexities of insurance, whether you own an electric vehicle, a hybrid, or a traditional gasoline-powered car. We’re here to ensure you have the right coverage in place to protect your investment and keep you on the road with confidence.
For more information on how to manage the risks associated with owning an electric vehicle, or to review your current insurance policy, feel free to reach out to us. We're here to help you worry less and drive more.