A hefty insurance premium for your electric car

A salty insurance premium for your electric car


Car insurer advertisements have always fascinated me. Because they make us dangle discounts based on an unknown price and because when it comes to electric vehicles, you are systematically granted a 10% discount.

I admit it, I rarely take the time to shop around for my insurance. Probably out of laziness, but also because the time that must be given to this shopping is considerable. That said, when I got my first electric vehicle last fall, I was shocked. Because the premium for that $29,000 Chevy Bolt EV (including government credits) was almost twice that of my Silverado pickup, which is more than double the value.

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So for me it was nonsense, considering that the risk of theft is greater and it's clear to my mind that a Silverado is certainly more prone to claims, by nature of the vehicle.

At the three insurers with whom I had quotes made, I was vaguely told that they were calculations by actuaries, based on the data obtained. In short, no one really knew what to answer me. To get to the bottom of it, my colleague Germain Goyer and I had the idea of ​​speaking to someone neutral in the insurance industry, capable of answering these questions more effectively. The name of Louis Cyr (insurance broker known in the media) quickly came to mind.

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In explaining my case to him as well as that of more Internet users who write to us on the subject, he quickly mentioned four main reasons why electric cars are very expensive to insure, admitting from the outset that the famous 10% discount often publicized is nonsense.

First, he mentioned the complexity for an insurer to be able to honor its obligations following a claim, considering the great scarcity of electric vehicles on the market. Basically, if it takes a year, sometimes two, to get your hands on such a car in new condition. And it is impossible for an insurer to replace said car in a shorter time. The same goes for the availability of parts, which is very problematic. Consequently, the insurer must often provide a replacement vehicle for a longer period, ideally electric, otherwise it must compensate for the cost of using gasoline. 

The second point concerns the cost of parts, which are generally higher than for a petrol car. On this point, it is clear that Tesla comes to play a decisive role, the costs of the parts being both astronomical, not to mention the fact that it fluctuates according to demand. That said, even on an entry-level electric car, the technology therein and therefore the cost of repairs are higher. 

Mr. Cyr then mentioned the risk associated with semi-autonomous or even fully autonomous driving (Tesla). Certainly, many gas-powered vehicles are also equipped with these technologies, but they are particularly found on EVs. This reason is invoked because of the liability of the insurer, who must still settle the claim, but if the driver is not at fault. In other words, if the accident is caused by a failure of the technology and not due to human error, the driver and therefore the insurer remain nevertheless responsible.

Finally, it was questioned of the risk of fire linked to the electric car. Not necessarily because electric cars burn in greater numbers, but because when there is a fire, the costs of decontaminating the site are disproportionately higher than with a gasoline-powered car. A city or a company could thus require the insurer to pay for the decontamination of an environment where the lithium battery would have burned, emanating from extremely toxic elements.

Moral of the story, before shopping for an electric car, it is better to take the time to check with the insurer that it will be the premium, and take the time to shop around. You might like me take the leap and realize that some of the cost of fuel saved each month will end up in someone else's pocket.