Electric Vehicles Face Higher Insurance Costs Despite Growing Popularity: A 2024 Analysis

In 2024, what's the reason behind the higher insurance rates for electric vehicles compared to hybrids?

The continuous flow of information from the insurance sector has revealed a consistent pattern where insuring electric vehicles comes with a heftier price tag.

The number of these vehicles in circulation has reached a point where it's clear that insurance providers aren't just safeguarding against the uncertainties of an emerging class of vehicle.

The insurance analysis team at LexisNexis Risk Solutions has reviewed data for the calendar year and found that electric vehicles experience claims 17% more frequently and have claim costs that are 34% higher compared to what the company categorizes as conventional market segments.

According to the latest report released on Thursday by LexisNexis, there has been a sharper increase in both the frequency and the cumulative sum of insurance claims for electric vehicles (EVs) than their relative share in the overall Personal Property Auto (PPA) market this past year. The data, derived from the company's own research, indicates that although EVs made up only 1.5% of the insured vehicles in 2023, they accounted for 1.7% of the total number of insurance claims paid out and 2.3% of the entire financial outlay for claims settlements.

2022 Rivian R1T undergoes IIHS safety evaluations

According to findings by Consumer Reports from the previous year, insuring an electric vehicle (EV) can set you back an additional several hundred dollars each year compared to insurance for similar gas-powered vehicles, hybrids considered. Considering the key elements identified by LexisNexis, alongside the steep price of swapping out batteries, this price disparity doesn't seem poised for a reversal in the near future.

Electric vehicles (EVs) do have a silver lining for insurers who are cautious about risks. The Highway Loss Data Institute (HLDI) reports that EVs have a lower theft rate compared to vehicles that run on gasoline.

The hazard pool remained unaffected despite a surge in electric vehicles

The study highlights that the year 2023 marked a significant leap for electric vehicles (EVs) in the market. There was a substantial 54% rise in EV sales compared to the previous year, hitting 1.4 million in the United States. Consequently, the count of insured EVs, which also encompasses plug-in hybrids, soared by 40%, reaching 3.9 million. In comparison, the number of insured personal cars saw a meager increase of 1.2%, totaling 265 million.

Despite the increased number of owners, drivers, and electric vehicles, this did not significantly shift the chances to the advantage of those driving EVs.

The 2024 report on electric vehicle insurance claim patterns by LexisNexis.

The firm noted that the increased number and seriousness of claims involving electric vehicles (EVs) are leading to growing profit concerns for insurers of these vehicles. It was also mentioned that the unique driving dynamics of EVs have resulted in more frequent and severe claims compared to those for traditional gasoline-powered vehicles.

Green Car Reports has contacted LexisNexis seeking clarification on what is meant by these driving experiences, questioning whether it pertains to city driving, riskier driving behavior, or another element.

In 2023, American drivers exhibited more dangerous behaviors on the road, with increases not limited to electric vehicles. Instances of speeding, driving while intoxicated, and not paying attention while driving have all risen, surpassing rates seen before the pandemic. Specifically, incidents of driving under the influence saw a close to 9% rise in the first half of 2023 when compared to the same period in 2019.

In general, for all vehicle categories, the seriousness of bodily injuries increased by a fifth between 2020 and 2023, and the extent of property damage (in terms of the value claimed) surged by nearly half.

The company noted that a higher proportion of electric vehicle owners were on the hunt for more affordable insurance premiums, surpassing the already high rates of policy comparisons and changes seen in 2023. This trend was driven by significant increases in insurance rates initiated by providers in the second quarter of 2022, which continued well into 2023. As a result, there was a remarkable 14% rise in insurance costs for the entirety of 2023 compared to the previous year.

The costly premiums for electric vehicle coverage have prompted Tesla to establish its own insurance offering. Currently accessible in a dozen states, Tesla Insurance employs a live algorithm to determine rates influenced by driver behavior everywhere except in California.

2023 Model of the Chevy Bolt

LexisNexis became embroiled in a controversy when it was revealed that General Motors provided the company with detailed information about Chevrolet Bolt EV owners' driving patterns via the OnStar Smart Driver initiative, a program that numerous drivers were unaware they had been signed up for by the car dealers.

Currently, insurance companies are struggling with timely responses and customer contentment. A significant portion, 40% of participants, reported that receiving complete payment from their insurer took a month or more. Additionally, nearly half, 46%, of individuals engaged in these claims expressed dissatisfaction with the process. Clearly, there's considerable opportunity for insurance firms to enhance their services—and potentially, attract those cautious drivers.

Categories:

Participate:

Readers of this article also checked out:

Spread the Word:

Reach Out to the Editor:

Stay Updated:

Eco-Friendly Car News Digest

Register to receive daily updates on the newest developments in eco-friendly vehicles and environmental news straight to your email!

I consent to getting emails from Green Car Reports and acknowledge that I can opt out whenever I choose. Privacy Policy.

Insurance premiums for electric vehicles remain higher than average. Criminals mistakenly believe that the thick cables used for charging these vehicles are valuable. The petroleum industry is actively challenging the Environmental Protection Agency's standards through legal action. Additionally, we take a closer look at Volvo's hybrid electric vehicle, the S60 Recharge, which hints at the company's shift towards electric vehicles. This and other topics are being discussed at Green Car Reports. Upon evaluating the Volvo S60 Recharge, Green Car Reports noted that while the vehicle seems to struggle with its dual nature as a plug-in hybrid, it performs with a greater electric emphasis than Volvo's earlier hybrids. The oil…

The charging cords for devices on the market are comprised of significant quantities of copper, the cost of which has recently skyrocketed to unprecedented levels

Oil firms are targeting Environmental Protection Agency regulations that had eased the miles per gallon requirements for trucks and SUVs compared to the initial proposal.

The 2024 Volvo S60 Recharge, a plug-in hybrid, seems to have a bit of confusion regarding the dominance of its power sources, ultimately demonstrating that electric reigns supreme.

The E-Tron GT continues to match the Porsche Taycan's performance and aims to enhance its prowess on the highway as Audi's strongest vehicle.

Volvo has halted production of its most fuel-efficient hybrid model. Kia is reportedly considering Mexico as the manufacturing site for its new budget-friendly electric vehicle. Fisker's ambitious Ocean project has unfortunately failed. Additionally, the question arises: why aren't Americans utilizing their electric vehicles more frequently? All this and more can be found at Green Car Reports. Fisker, a U.S.-based electric vehicle company, has declared bankruptcy…

The reasons behind the United States deviating from trends common to numerous other electric vehicle markets remain vague, though low gasoline prices and concerns over battery recharging could contribute significantly.

The assets of Fisker are set to be auctioned following the firm's bankruptcy announcement this week.

Kia might set its sights on Mexico for the production of its EV3 compact electric crossover, lured by the prospect of a lower cost and the availability of electric vehicle tax incentives

Volvo has officially announced that the American models of the S60 sedan, as well as the S60 Recharge – the plug-in hybrid with the best fuel efficiency and the longest electric driving range – will cease production in South Carolina and will not be brought in from overseas.

In the recent shareholder meeting of Tesla, there were significant updates regarding their products and battery technology. While there is still a group of people who are hesitant to embrace electric vehicles, pointing to high prices as their main concern, the market is showing a trend of decreasing prices for new electric vehicles, and a notable drop in the cost of pre-owned ones. Stay tuned for more insights at Green Car Reports. We…

Associated Content

Top Picks

Image Gallery

Current Events

Press

Feeds

Organization

Connect with Us Now: