Electric Cars.

17 April 2024

Over the past few years we’ve seen a surge in electric car sales both worldwide and in NZ, but recent headlines suggest the love affair with going electric might be fading as more issues come to light about the viability of fully electric battery cars.

“Hertz sells one-third of EV fleet”
“Global chairman of Toyota predicts electric vehicles will only make up 30% of new-car sales in the future.”
“Mercedes scraps plans to make electric only cars due to market conditions”

At Star we have embraced electric cars onto our insurance book but we have found they present unique challenges compared to traditional gasoline-powered vehicles. This is why you might see tighter underwriting controls and higher premiums on fully electric cars.

Electric cars often have higher upfront purchase costs compared to their gasoline counterparts. This can result in higher insurance premiums since we need to factor in the cost of repairing or replacing the vehicle in the event of an accident.

While electric vehicles (EVs) typically have fewer moving parts and require less maintenance than traditional vehicles, repairs can be more expensive due to the specialized components such as batteries and electric motors

The infrastructure for repairing electric vehicles is not as extensive as that for traditional vehicles, leading to longer repair times and higher costs. This can impact insurance premiums as we need to cover additional expenses such as loss of use for a longer period of time. 

The battery is one of the most expensive components of an electric car. The battery is also commonly located on the underneath of the vehicle and subject to accidental road damage. We need to account for the potential cost of replacing or repairing the battery in the event of claimable damage.

Electric vehicles incorporate advanced technology such as regenerative braking and autonomous driving features. We’re still gathering data on these technologies, making it challenging to accurately assess risk and determine appropriate premiums.

Depreciation is faster on electric vehicles than traditional vehicles, partly due to rapid advancements in battery technology and range. We take this into account as the lower resale value of electric vehicles makes selling our salvage of written off electric vehicles less cost-effective.

Star Insure is happy to offer terms on electric vehicles and we’re adapting our pricing and underwriting offerings to reflect more of them being on our roads. With every policy and claim we’re learning more about how to better accommodate the unique characteristics of electric vehicles.