EV owners face shock as powered-up premiums put people off plugging-in

Insurers are powering up premiums for electric cars, leading to a drop-off in demand for the cleanest and greenest cars on our roads, according to a major consumer website.

HonestJohn.co.uk is calling on the government to scrap Insurance Premium Tax (IPT) for electric vehicles after it emerged that some EVs cost as much as 60% more than their petrol-powered equivalents to insure.

The move comes after the latest industry figures from January to June 2018 show that pure electric car registrations are down by more than three per cent compared to the first half of 2017.

Data from the Society of Motor Manufacturers and Traders (SMMT) show that there were more than 1.2 million petrol and diesel cars registered between January and June 2018, yet just 7441 electric cars left showrooms over the same six months, raising a serious question: What needs to be done to increase EV demand with UK buyers?

High list prices, range anxiety and limited access to charging points have all been routinely blamed but the issue of highly charged insurance premiums has been quietly ignored.

“If the government is serious about getting more people into genuine zero-emission electric vehicles, rather than plug-in hybrids, then there needs to be decisive action,” said HonestJohn.co.uk Managing Editor, Dan Powell. “And the government itself holds the key. At present, it takes 12% off every motor insurance premium in IPT. If it removed IPT from pure electric vehicles, then premiums would instantly drop and this would improve the incentive for buyers to swap their diesel or petrol for pure electric.”

HonestJohn.co.uk‘s analysis of the insurance market revealed that pure electric cars carry a hefty premium when it comes to comprehensive cover, with some models up to 60 per cent more expensive to insure than their petrol or diesel counterparts.

To make matters worse, it is young professionals – the target buyers for most EVs – being hardest hit, with some insurers demanding more than £1,800 for 12 months’ cover.

“While on the one hand electric vehicles tend to be smaller and less powerful, they also need specialist parts and skills to repair so may cost more to insure in some cases,” said a spokesperson for the Association of British Insurers. “But drivers can expect pressure on insurance premiums to reduce as the technology becomes more widespread”

After receiving complaints from HonestJohn.co.uk readers about the unaffordable cost of insurance for electric cars, the website analysed the market to see what a typical driver can expect to pay for comprehensive 12 month policy.

A test quote on similar models and car manufacturers from Confused.com found a female driver aged between 30 and 55 who had no motoring convictions showed that a petrol car with a comprehensive motor insurance policy was £567. Meanwhile it was £607 for a diesel car and £751 for an electric vehicle. Running the same quote for a male aged under 25 revealed that the average annual insurance policy would cost £1484 for a petrol car, £1592 for a diesel and a whopping £1854 for an electric vehicle.

Delve into the numbers at GoCompare for a professional in their 30s and the costs for insurance drop, but the price disparity grows. For example, a 35-year-old accountant living in a city with five years’ no claims can expect to pay £247 when it comes to insuring a 2015 Renault Clio petrol. A similar fully comprehensive quote for the same firm’s electric Zoe is £395 – 60 per cent higher than the Clio, despite the fact that both are similar priced and equipped.

“Until people actually live with electric cars, there’s a perception that owning one comes with a compromise,” added Dan Powell. “Many of these compromises have already been addressed – EVs have a good range, are quickly and easily charged and are getting cheaper to buy, but the government and insurance industries are doing the future of electromobility no favours at all, and this is something that requires immediate change.”