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The Actuary The magazine of the Institute & Faculty of Actuaries

Electric cars almost 50% more expensive to insure

UK drivers opting for electric cars are paying an average of 45% more to insure their vehicle than other motorists, according to research by comparethemarket.com.

New charging points planned ©Shutterstock

The research shows that, while the average car insurance premium stands at around £740, it costs approximately £1070 to insure an electric vehicle.

This comes after the government announced earlier this week that it would ban the sale of all new petrol and diesel cars by 2040, in an effort to tackle air pollution.

“Electric cars can be expensive, as their production has yet to reach a volume which will enable economies of scale in their manufacturing and distribution costs,” Comparethemarket.com director, Simon McCulloch, said.

“However, people looking to purchase an electric vehicle need to consider carefully the overall running costs, including insurance, as well as road tax and charging costs.”

The government says that poor air quality is the largest environmental risk to public health in the UK, and that NO2 levels in the air are above legal limits in almost 90% of urban areas.

This is estimated to be responsible for approximately 23,500 early deaths in the UK each year, and cost the country £2.7bn through its impact on productivity.

It announced in the Queen’s speech last month that it would introduce a new Automated and Electric Vehicles Bill, to help with the transition to low-carbon transportation.

This will provide the installation of charging points for electric and hydrogen vehicles, and allow the regulatory framework to keep pace with evolving technology.

In addition, it is to extend compulsory motor vehicle insurance to cover the use of automated vehicles, with the aim of ensuring compensation claims are paid quickly, fairly, and easily.

However, McCulloch, said: “While many incentives are being taken to promote the use of electric vehicles, including increased numbers of charging stations and tax breaks for electric car owners, this data shows that potential owners need to consider other factors too.”

He continued: “Particularly for the entry level electric models, the cost of insurance could swing the purchasing decision back in favour of a petrol or diesel model.”

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