Electric Cars: Consumers are Ready, but are Insurers?
Insurance Experts' Forum, March 25, 2011
Electric cars are already beginning to roll off assembly lines, but interested drivers are struggling to find insurers willing to let them drive off the lot. Painfully aware of this growing problem, TheGreenCarWebsite.co.uk, a site dedicated to aiding consumers who are looking to purchase “green cars,” conducted an investigation into the UK insurance market to find out if insurers are ready for the growing numbers of electric-powered automobiles.
In its research, TheGreenCarWebsite found that many price comparison sites and large insurers have not yet altered their own websites to allow customers to get electric car insurance quotes. Additionally, a blogger from TheGreenCarWebsite called a few large insurers for a quote, only to find that the firms were “baffled and unprepared” for the request.
The Consumer Electronics Advisory Group agrees, noting that finding information specific to insuring electric cars on the Web isn’t easy. The organization previously contacted a handful of U.S. insurers, including GEICO, Progressive, State Farm and Allstate, in order to gain more information about insuring electric cars only to find that they, also, were not exactly ready.
The reasons behind why it’s so difficult to underwrite an electric car vary.
Andy Goldby, director of motor underwriting at Direct Line, told MotorTorque, a consumer site for car buyers, “At the moment insurers have not been involved in the proposals on how to deal with the batteries, the charging points and the potential dual ownership of the car.” By this he means that the lithium ion battery packs used to power these cars are so expensive they have to be leased instead of sold. In this instance, the customer owns the actual vehicle, but the manufacturer retains the rights to the battery, resulting in the precarious classification as dual ownership.
Given this tangled situation, it comes as no shock that insurers are hesitant to underwrite electric vehicles. How does an underwriter account for an accident where the battery pack is damaged or stolen? MotorTorque reports that this complication has led to many large insurers refusing to offer electric car insurance quotes, leaving just a handful of specialist insurance companies offering coverage for electric car drivers.
TheGreenCarWebsite’s investigation, however, did uncover some comparison websites and insurers that are ready to quote prior to the deliveries of the first Nissan Leaf models to UK customers. The blogger writes, “Speaking to various insurance firms, it is clear that many aren’t ready and need to adjust their websites to accept quote requests for cars which aren’t petrol or diesel powered. As time goes by, the situation should improve, but I think it might be fair to say that while the insurance industry is adapting, it’s got teething troubles to get through.”
It’s unrealistic to say that insurers aren’t underwriting electric cars. But if these “investigators” are having a hard time finding coverage, so will potential customers, leaving a burgeoning market underserved. Forward-thinking insurers should seize this opportunity to jump-start this currently flat-lining market.
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