EVs cost more to insure, repair

CLEAN tech and sustainable innovations like electric vehicles are being sold as critical for addressing climate change by reducing our carbon emissions.

But other unexpected factors such how we insure and repair these vehicles may be causing more harm than good when it comes to the environment.

In Australia, many EVs are written off even when they are in a relatively minor accident, rather than the much more sustainable option of having the specific damage repaired.

According to John Elliott, chief executive of Elliot Insurance Brokers, the issue stems from EV batteries being attached to the chassis.

“If you end up with chassis damage, then the whole entire battery and chassis are affected,” says Mr Elliot, whose company was an Australian Startup Awards finalist in 2014.

Because the battery is often the most expensive part, this can result in the vehicle just being written off.

And since EV batteries have a high environmental footprint to manufacture and recycle because they contain lithium, cobalt and nickel, write-offs for relatively minor damage come at a high cost to the environment.

Higher premiums

Write-offs are also reflected in the increased cost of insuring electric vehicles. According to the Insurance Council of Australia, insurance premiums for EVs are generally about 20 per cent higher, making them less appealing and less accessible for consumers and businesses.

The reasons for increased insurance premiums for EVs are the higher purchase price of the EV, parts (especially the battery) are expensive to produce and replace and the parts supply network is still underdeveloped in Australia while import costs are quite high.

EV batteries require specialised equipment to handle, and have different requirements for disposal and recycling.

There are fewer appropriately trained EV technicians and service centres in Australia than say the United States.

Mr Elliot thinks the skills issue is also a critical factor in ensuring EVs are living up to their sustainable potential in Australia.

“As opposed to the insurer issue, maybe it’s a repair issue and [we needto come up] with solutions that are cost effective in order to not be so quick to jump to the write-off,” Mr Elliott says.

“Part of the writing off the vehicle would be because the lack of process and skills.

“I think it’s a ‘too-hard basket’ is where it gets placed.”

Insurers hedge

Mr Elliott says that because of these challenges, insurance companies want to participate but are hesitant to provide options.

“[Many companies] are not really sure how to assess the claims costs and they’re getting varied data through, the reaction from most insurers is to back away from it,” he says.

But these companies still want to get on to the EV bandwagon. He says they will have blog posts and information about EVs but no way of easily offering a quote.

If you’re just looking for regular insurance, the companies are all “clamouring” to get your business by paying for top search positions on Google, Mr Elliott says.

Thought leadership

And so, what to do? Mr Elliott says it’s all about providing thought leadership for the Australian insurance industry to create real innovations in the sector around EVs.

“One of the things we do as brokers is about engaging a range of experts that sit around us,” he says.

“It’s trying to assemble a team of the insurers, the relevant data and the relevant experts in order to try and hash out a solution and then present that solution to the market.”

Mr Elliot’s company, which is rebranding as The Green Broker in August, is setting an example for the rest of the industry by working with companies like Fremantle-based Climate Clever, a carbon emissions accounting service and digital platform.

• Dr Kate Raynes-Goldie is a cultural anthropologist specialising in human communication, innovation and AI. She is also a keynote speaker, Certified LEGO® Serious Play® Facilitator and the creator of SUPERCONNECT®