(Article published in L’AUTOMOBILE Collision magazine, April 2024)

By Marc Bardiaux

The arrival of electric vehicles represents a major revolution in the automotive world. Insurance is no exception. An overview of the current state of things. . .

The urgency of climate change is stimulating reflection and generating its share of innovations. Electric vehicles, for example, are becoming increasingly common on our roads, bringing a plethora of technological innovations and radical changes. The insurance industry is not immune to these new developments. As an integral part of the aftermarket, insurers’ operations and costs fluctuate in tune with all the other components of a vehicle.

To get an idea of the market, it’s worth noting that there are currently 250,000 electric vehicles (EVs) in Québec, all categories combined, and that by 2030, this figure will rise to over 1.5 million EVs. This statistic heralds more far-reaching changes in the years to come. Insurance represents a significant portion of operating costs, it is therefore important to pay close attention to this point.

Policy Costs. . . On the Rise!

Most stakeholders believe that insurance costs will continue to rise as the electric vehicle fleet expands. There are several reasons for this potential increase. One is the initial value of the vehicle, which is generally more expensive than its internal combustion counterpart, making it more costly to replace in the event of a total loss following a collision. The price of replacement parts, especially the battery, means that many incidents result in a total loss claim. It’s also worth noting that a greater number of parts require replacement rather than repair on an electric vehicle, unlike its ICE equivalent.

The shortage of skilled labour is also part of the equation, as the vehicle spends more time in the workshop, driving up the cost of leasing a replacement vehicle. Not to mention the fact that a specialized technician generally requires higher wages, further increasing the repair bill. There are, however, a number of initiatives aimed at minimizing this rate increase. In Québec, for example, the government is reducing the insurance tax on electric vehicles.

Finally, while the cost of insurance premiums is slowly rising, it’s important to look at operating costs as a whole, and over a long period, to get a fairer idea of the financial impact of an electric vehicle, since insurance represents only a fraction of the costs.

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