Why EV Insurance Works Differently: Unpacking the Process
Download MP3Introduction:
Exploring the differences in insurance claims processes between electric vehicles (EVs) and traditional gasoline or diesel vehicles.
Exploring the differences in insurance claims processes between electric vehicles (EVs) and traditional gasoline or diesel vehicles.
Key Differences in Engineering:
- Gasoline vehicles have separate powertrains and frames.
- EVs integrate the battery and powertrain into the chassis, often as part of the vehicle’s floor pan.
- Accidents in EVs are more likely to damage the powertrain, leading to higher repair costs.
High Insurance Costs for EVs:
- Insurance premiums are based on claims history and repair costs.
- EV accidents often result in total loss claims due to extensive damage, even in low-mileage vehicles.
Challenges for Vehicle Owners:
- Total loss claims pay actual cash value (ACV), which may not cover the cost of a new vehicle.
- Repairs for gasoline vehicles can be cost-effective, while EV repairs often necessitate replacing costly components.
Salvage and Certificate of Destruction (COD):
- Many EVs are sold at salvage auctions with COD designations, preventing them from returning to the road.
- This minimizes liability for insurance companies but reduces resale value for damaged vehicles.
Long-Term Risks with EV Repairs:
- Potential for hidden battery or structural damage to emerge years later.
- Insurance companies are cautious about supplemental claims and liability issues.
Engineering and Market Adjustments:
- EV batteries are sensitive to impacts compared to robust internal combustion engines.
- Tesla and other manufacturers are considering engineering changes to reduce repair costs.
- Tesla has introduced its own insurance service to address EV-specific challenges.
Conclusion:
The shift to EVs is reshaping the insurance industry, with evolving claims processes, premium structures, and vehicle engineering.
The shift to EVs is reshaping the insurance industry, with evolving claims processes, premium structures, and vehicle engineering.
Engagement:
Drop your thoughts on how insurance for EVs can be improved in the comments.
