If you’ve ever wondered why Electric Vehicle (EV) insurance may cost you more, you might have come across various reasons and some myths 😉 Here, you will see some of the actual reasons:

1. Higher Repair Costs: EVs are just emerging, so repairs require specialized knowledge and equipment. It’s not just about building the vehicle but building the whole ecosystem. Isn’t it? The key components of EVs are the batteries, and they are very costly.

2. Vehicle Value: EVs are generally costlier than most Internal Combustion Engine (ICE) vehicles. The emerging EV engineering landscape and raw materials make them expensive. No surprise, insurance premiums are partly based on the vehicle’s value; high vehicle costs lead to higher insurance costs.

3. Specialized Parts: The parts needed for EV repairs, especially batteries and advanced electronics like sensors and chips, are more expensive and less readily available than parts for traditional vehicles. This scarcity and the complexity of these parts drive up repair costs, contributing to higher insurance premiums.

4. Fewer Repair Shops: There are fewer repair shops equipped to handle EV repairs, which allows those that do to charge more for their services. This lack of competition in EV repair further increases costs.

5. Technological Features: Many EVs come equipped with advanced technological features such as Autopilot and Full Self-Driving (FSD) capabilities. These features, while beneficial, are expensive to repair and maintain, thus increasing insurance costs.

6. Higher Severity of Claims: While EVs tend to have fewer overall claims, the claims that do occur tend to be on expensive components, leading to higher costs per claim. This increased severity translates to higher premiums.

Listing these facts is not meant to scare you away from owning an EV. After all, every transition in this world comes with a cost. EVs can’t be an exception. EVs have tall claims for humankind that need to be time-tested.

While we expect EV manufacturers to find solutions to address the concerns listed above, insurers who roll up their sleeves and optimize underwriting and claims adjudication using effective digital transformation, data, and automation through AI can contain costs significantly. These actions are not optional but a need of the hour. 

I am extremely privileged to be part of many interesting digital transformation journeys. If you wonder where to start and what to do, help is just a shout away 😃

www.krkaleraj.com

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