Thinking of buying an EV and wondering what that may mean for your auto insurance premiums?
Electric vehicles are insured much like any other car. While they have been known for being more expensive to insure in the past, the gap is closing with gas-powered cars.
The federal government is aiming for 60 per cent of car sales to be EVs by 2030, with all sales being electric by 2035. In B.C., the province recently announced its wanted to have 100 per cent of vehicle sales to be electric by 2035.
Like traditional car insurance, EV policies still require the same types of coverage. In Ontario, for example, you need a minimum of $200,000 in third-party liability, accident benefits, direct compensation property damage and uninsured automobile coverage. It’s also common for drivers to increase coverage to include comprehensive and collision.
Any insurer considers where the driver lives, their age and driving record, kilometres driven and claims history. But there are some differences when it comes to EVs, including:
The good news is many insurance companies offer discounts for driving an EV. While they vary by insurer, you could save up to 10 per cent.
In addition, the federal government offers a $5,000 purchase incentive for EVs with an electric range over 50 kilometres and $2,500 for plug-in hybrid vehicles with an electric range under 50 kilometres. And the cost to run an EV is substantially less than gas-powered vehicle. Canada's 2023 Fuel Consumption Guide found the annual charging cost for the owner of a Tesla Model S vehicle is $525 per year. That’s compared to a Honda Civic, for example, annual fuel costs can reach $1,775.
However, access to parts and battery replacement are still a challenge. In the event of an accident where your EV's battery is severely damaged or the warranty expires, you could be set back thousands if your insurance won't cover it.
"Since EVs are still new to the market, we’re still in the transition period, not only in adoption, but overcoming challenges impacting both the industry and customers related to available vehicle supply and skilled labour. EVs are built differently than gas vehicles and sometimes can be more expensive to repair, which can impact premiums," Qui Trieu, an AVP National Underwriting for Aviva Canada told CTV News in an emailed statement in September.
A recent survey by BrokerLink revealed 78 per cent of Canadians are concerned about the cost of their insurance premiums on an electric vehicle.
This number differs provincially. For example, 94% of respondents in Atlantic Canada highlighted this concern, while only 68% expressed concern in Quebec. In Ontario, 78% are concerned, while 82% in B.C. shared the same anxieties.
The survey also revealed 71% of Canadians who own gas-powered cars are reluctant to give them up. And yet, 59% of Canadians who don’t currently have an EV are excited to drive one in the future.
More than half (54%) of Canadians said they will only consider switching to an insurance provider that offers specialized EV coverage if the premiums are competitive, BrokerLink stated in an email to Canadian Underwriter.
Meanwhile, just 24% of Canadians are currently familiar with EV insurance policies, while 20% don’t expect that a policy would have any specific benefits related to EVs.
“Where we’ve seen the subtle differences emerge early on is with respect to endorsements, or perks, offered by different companies,” Grant Clarke, vice president, national personal insurance at BrokerLink, told Canadian Underwriter. “Our survey suggests that the consumers in Canada have limited knowledge about auto insurance policies for electric vehicles, and more education and support is needed to empower them in their transition to EVs.”
Bottom line? Similar to gas-powered vehicles, looking for EV auto insurance is about comparing premiums. The best way is to have your broker shop the market on your behalf to be sure you’re comparing the same coverage and are taking advantage of all the perks and discounts.
With files from Canadian Underwriter, CTV News