Punitive insurance premiums for EVs are hitting lower-paid workers hardest and preventing them from going electric.   

Fleet Evolution MD and founder Andrew Leech said the industry is seeing falling accident rates involving EVs, but insurance rates are going through the roof

Insurance rates for electric cars have increased by 150 to 300% in recent months, according to EV salary sacrifice and fleet management specialist Fleet Evolution – which it believes is the result of outdated research and uncompetitive insurer attitudes towards EV running costs.  

The rise in insurance rates for electric cars comes despite evidence of a fall in accident rates involving EVs.   

Tamworth-based Fleet Evolution, which is in the midst of a record year in terms of EV orders, says that, based on a sample of 1,000 cars from its own fleet, it has seen a 40% reduction in accident rates involving EVs over the last two years.  

“The two things simply don’t add up,” said MD and founder Andrew Leech. “We are seeing falling accident rates involving EVs, even though there are far more of them on the road, while at the same time, insurance rates are going through the roof.  

“EVs were typically more high-powered and running costs were higher several years ago. But as more mainstream models are becoming available, so whole-life costs are coming down – but we are not seeing insurance rates reflect that fact by coming into line with mainstream premiums or reducing as accident rates fall.”  

Leech cited a younger colleague who switched from a diesel-engined Volkswagen Golf hatchback to an ID.3 – the current electric equivalent – and was quoted a £900 insurance premium, compared to her existing £350 premium.  

Meanwhile, a newly delivered Audi e-tron has come with an insurance premium of £1,400 and a £1,000 excess from an insurer normally rated at the lower cost end of the market.   

“And that’s a for a 50-year-old man with a clean driving licence and maximum no-claims bonus,” Leech said.  

He believes that insurers are basing higher rates on perceived higher and historic SMR costs for EVs; although with fewer working parts, the reverse in reality is true.  

“If you look at Tesla, currently the most popular EV brand, historically the cars had to go back to the States for repair. Now, that’s no longer the case as there are over 30 Tesla service centres in the UK. But we don’t believe that’s being reflected in the insurance costs,” Leech stated.  

And the fact that many EVs have sophisticated Advanced Driver Assistance Systems (ADAS) has led to many electric cars being safer than the ICE models they replace, with fewer accidents.  

“Previously, a driver may have had a collision through lack of awareness or being distracted. Now the current ADAS means that such incidents are far less likely,” said Leech.  

As a result of being hit by the rising insurance rates, lower-paid – and often younger – workers are being prevented from using salary sacrifice as the higher rates potentially take them below the National Minimum Wage threshold.  

“Ironically, the people who would probably benefit most from having a low-tax, low-cost EV are often prevented from taking them due to the prohibitive and punitive insurance costs,” he emphasised.  

“There is little doubt in our minds that these current unrealistic and excessive insurance rates are acting as a barrier to wider EV uptake,” Leech finished.