EV cover update

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【Summary】John Lewis Financial Services temporarily halted insurance for electric vehicles (EVs) due to risks and costs analyzed by underwriter Covéa. A review is ongoing, and next steps are being determined. The cost of insuring EVs is higher than for traditional cars, with premiums rising by 72% compared to 29% for internal combustion engines. Insurers lack experience in pricing EV premiums, and concerns about EVs being quieter and potentially leading to more accidents contribute to the higher costs.

FutureCar Staff Nov 23, 2023 5:14 AM PT

John Lewis Financial Services has provided an update regarding its temporary suspension of insurance for electric vehicles (EVs). Earlier this year, the department store's lending arm announced that it had stopped offering new policies and renewals for EVs due to a decision made by its underwriter, Covéa. The reason behind the suspension was Covéa's desire to assess the risks and costs associated with insuring EVs. John Lewis confirmed that the review process is still ongoing, with the next steps being reviewed by Covéa, the underwriter responsible for managing these policies.

In April 2021, Covéa and John Lewis entered into a five-year motor insurance partnership. Under this agreement, John Lewis markets car insurance while Covéa handles policy administration, underwriting, pricing, and claims service. The decision to suspend insurance for EVs by Covéa came at a time when the cost of insuring these vehicles is higher compared to petrol or diesel-powered cars. Recent data from Confused.com revealed that EV drivers experienced a 72% increase in insurance costs, while the increase for drivers of internal combustion engine (ICE) vehicles was 29%. One of the reasons for the higher premiums is the lack of experience that insurers have in pricing premiums for EVs, as the industry is still relatively new.

Motor insurance expert Louise Thomas explained that the unfamiliarity with driving EVs contributes to the higher costs. EVs have instant acceleration, which can take drivers some time to adjust to, and braking feels different as well. The brakes activate as soon as the driver lifts their foot off the accelerator, even before they press the brake pedal. Additionally, EVs are quieter than ICE vehicles, which raises concerns about potential accidents. Insurers anticipate an increase in claims due to the quietness of EVs, leading to higher premiums.