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‘The quotes were £5,000 or more’: electric vehicle owners face soaring insurance costs

<span>Photograph: Graeme Robertson/The Guardian</span>
Photograph: Graeme Robertson/The Guardian

Driving an electric car should be a win-win, saving money and the planet. So David* was shocked when the insurance on his Tesla Model Y came up for renewal, and Aviva refused to cover him again, while several other brands turned him away.

When David did secure a new deal, the annual cost rocketed from £1,200 to more than £5,000.

“My insurer was Aviva from July 2022 to July 2023, but when it was coming up for renewal, I received a letter stating that they would not be covering the Tesla Model Y any more,” David says. “I am a member of a Tesla UK owners forum, and lots of other people seem to be having the same issue.”

In the Facebook group, members share stories of horror renewal quotes, with increases ranging from 60% (up to £1,100) to a staggering 940% (a jump from £447 to £4,661, according to a screengrab shared by one driver).

“I spent weeks on every comparison site as well as trying individual insurers and specialist brokers, but either they wouldn’t cover the car or the quotes were £5,000 or more,” says David, whose only change in circumstance was three points on a licence.

Privilege, Vitality, Axa and the specialist broker Adrian Flux were among the brands he found were “unable to insure him at this time” before he nailed down a policy with Direct Line, albeit at a price.

An electric vehicle at a charging station in Ingliston, Scotland
Motorists have been sharing stories about high car insurance renewal quotes on social media. Photograph: Murdo MacLeod/The Guardian

“The best quote I could get was from Direct Line at £4,500,” he says, adding that the total cost exceeded £5,000 once the interest for paying monthly was included, “because who has got that kind of money in one go?”

But it is not only owners of Model Ys – which with a starting price of about £45,000 was the bestselling electric car in the UK last year – who are finding that, like the government, insurers are wobbling about the cost of net zero.

Alex Gerlis, who bought a Smart EQ Forfour last year, had insurance from John Lewis Finance but, before the mid-August renewal date, it advised him it would not be able to offer a renewal because it was not insuring electric cars (see below).

It comes as all motorists face soaring insurance costs, with prices said to be at an all-time high. A recent cost of living bulletin from the Office for National Statistics revealed that the price of car insurance – which for many Britons is one of their biggest household bills – is up by 52.9% in the last 12 months.

However, this average masks bigger increases for electric car owners, according to Confused.com. Its figures, derived from quotes, show that insurance premiums for electric vehicles are 72% – or £402 – higher than this time last year, at a typical £959. Meanwhile, for petrol and diesel car drivers, the increase is 29%, or £192, taking the figure to £848.

Louise Thomas, a motor expert at Confused.com, says: “Despite electric vehicles becoming more common, they are still the minority on UK roads, and insurers have less experience setting premiums for these types of cars.”

There’s also an issue around technology and skills in the electric vehicle repair networks

The Green Insurer’s Paul Baxter

With expensive features and upgrades now standard for electric cars, the cost of repairs is higher, too, which is having a knock-on effect on premiums, she adds.

Analysts say claims costs are 25% higher for electric cars, and that they also take about 14% longer to repair than a diesel or petrol equivalent. The cost and availability of parts is a factor, explains Paul Baxter, the chief executive of the new brand the Green Insurer. There is also concern around the batteries, and that damage, especially to the underside, can be expensive to fix.

“There’s also an issue around technology and skills in the repair networks,” Baxter says. Indeed, the Institute of the Motor Industry has predicted a shortage of about 16,000 electric vehicle-qualified mechanics come 2032. “They’ve not got to the stage they are with traditional cars in terms of expertise. If you dent a door, that’s straightforward, but if something has damaged the battery, in particular, they haven’t caught up with that.”

Despite the potential drawbacks that come with being an early adopter, high fuel prices as well as concerns about the environment have resulted in more drivers opting for an electric car, with almost 270,000 new vehicles registered in the UK last year – an increase of 40%.

Faced with the big increase in his insurance costs, David, who is in his 30s and lives in Bradford, looked at ending his lease, even though he loves a car he describes as an “iPhone on wheels”. The monthly payments are more than £600 but to terminate would involve paying a huge fee.

“I’m fortunate that I earn a decent wage and don’t have a mortgage that has increased as well because we are renting at the minute. I checked to see if I could change the car model but I’d have to pay an £8,000 forfeit.”

Five weeks into his Direct Line policy, he was able to find a cheaper deal, with a smaller upfront deposit, with Admiral, which reduced the cost by £75 a month to £404.

Sometimes insurers pause offering policies when new information comes to light, as this can affect how a vehicle is underwritten. Asked about its position on electric cars, Aviva said it regularly reviewed its underwriting criteria for all makes and models to reflect emerging trends and experience.

“Although we insured the Tesla Y Model last year, during the year we changed this acceptance criteria and we were no longer able to offer a policy at renewal,” a spokesperson said.

“We have made further changes and we are able to underwrite these vehicles on some of our products already and expect others to follow.” It is now possible to get cover through its Aviva Direct brand and on price-comparison websites.

Model car with motor insurance renewal letter
All motorists are facing soaring insurance costs. Photograph: Rosemary Roberts/Alamy

The John Lewis and Vitality electric car policies are underwritten by Covéa Insurance but it declined to comment on its rationale. However, John Lewis said: “Our underwriter has temporarily paused offering new policies and renewals on fully electric vehicles while they analyse the risks and costs entailed.”

Direct Line Group, which owns the Privilege brand, added that it was “committed to the electric vehicle market” and was offering insurance for cars from big manufacturers, including Tesla and Smart, “subject to individual circumstances. We price customers’ policies based on our view of risk and the ratings factors we use, including the model of car and inflation. Like many other sectors, insurers continue to face higher costs.”

The Association of British Insurers insisted that the motor insurance market “remains competitive, with cover for electric vehicles available from a wide range of providers”.

It added: “Our members fully support the rollout of electric vehicles and efforts to transition to net zero. Whether to offer insurance, and at what price, is a commercial decision for insurers based on their risk appetite.”

* Not his real name.

‘I understand premiums go up, but a blanket ‘no’ to EVs?’

Alex Gerlis
Alex Gerlis was given no explanation as to why his Smart EQ Forfour no longer qualified for a John Lewis policy. Photograph: Graeme Robertson/The Guardian

When Alex Gerlis and his wife bought an electric car last year, they shopped around for insurance before opting for a policy from John Lewis. It wasn’t the cheapest on offer but they trusted the brand and felt it was “the right kind of company to go with to insure an electric car”.

The policy was due for renewal in August but in July they received a letter saying that John Lewis would not be offering cover and that he would need to go elsewhere.

There was no explanation as to why the Smart EQ Forfour no longer qualified for a policy – the letter simply said: “Having reviewed your current details, we won’t be able to renew your car insurance policy arranged by John Lewis Financial and underwritten by Covéa Insurance plc.”

Gerlis – a former BBC journalist who now writes bestselling espionage novels – telephoned and was told that John Lewis was no longer insuring electric cars. He says the person on the phone said they could not understand why he was making a fuss about the policy change.

He complained, sending an email to the business head, Sharon White, and receiving an apologetic reply.

He feels the move flies in the face of John Lewis’s pledges to fight the climate crisis.

“I can understand that premiums might go up but to have a blanket ‘no’ on insuring electric cars is incompatible with John Lewis’s claim to be environmentally friendly,” he says.

“It put its car insurance business out to tender but what it didn’t do is say that ‘environmental and climate action is important to us, so this must include electric vehicles.’”

Insurance wasn’t difficult to find elsewhere – big names including Aviva, Admiral and Churchill were willing to cover the car. But he says this just shows how wrong John Lewis was to be apparently pulling out of the market.

Covéa would not comment.

John Lewis Financial Services told us: “Our underwriter has temporarily paused offering new policies and renewals on fully electric vehicles while they analyse the risks and costs entailed. This decision does not affect any existing policies in force, or hybrid vehicles.”

Hilary Osborne