Electric Vehicles & Insurance: A Guide for Aussie SMEs

Electric vehicles (EVs) are revolutionising the automotive industry with their eco-friendly design and efficient performance.

And governments across Australia are offering incentives for businesses and consumers to invest in EVs.

If you’re tempted to buy an EV for your SME, read on. We’ll explain the pros, cons and risk management considerations.

Benefits of EVs for Businesses

Integrating electric vehicles into your SME offer advantages, including:

• Lower operating costs due to minimised fuel expenses
• Potential tax incentives and rebates available different levels of government, which can offset your initial costs
• Fuel security because you’ll rely on electricity rather than imported fossil fuels, so won’t be so vulnerable to oil price fluctuations and supply issues
• Less noise, which is handy if you operate in urban areas or at night
• Boosting your business brand through a more sustainable and environmental reputation, says the Insurance Council of Australia, and
• Lower maintenance costs thanks to their simple mechanical design comprising fewer moving parts.

Government incentives and tax breaks for EV purchasing are constantly changing, so check for your state or territory (here’s WA’s if you’re based there, for example), as well as what’s on offer nationally. Look to lenders as well for good deals. For instance, Independent Australian auto finance lender Metro is one such lender the Clean Energy Finance Corporation has approved to offer eligible EV buyers a one percent discount for an EV car loan on its standard rate. Their website also has a state-by-state update on subsidies, rebates and tax incentives, or you can check the Federal Government’s one here.

Insurance Considerations for EVs

When it comes to insuring EVs, it’s different from traditional vehicles. You’ll need a more tailored approach. Here’s what insurers factor into EV insurance premiums:

• The vehicle’s value
• Costs associated with batteries
• Repair expenses, and
• The incorporation of advanced technology features.

You might need coverage for charging equipment or potential battery replacement costs. Understanding and addressing these unique insurance helps offer protection against unforeseen circumstances.

Potential Challenges in EV Insurance

Potential pitfalls to have an EV for business include:

• Higher initial repair costs due to specialised parts and dual-trained mechanics needed
• Issues around battery life – they degrade over time, which could have consequences for the vehicles’ value and insurance coverage (replacement batteries could cost up to $15,000)
• An EV battery explosion happening, but this is rare
• Cybersecurity concerns, particular with EVs having many connectivity features.

As well, the insurance industry faces challenges in accurately assessing risks for EVs. That’s because there’s limited historical data on claims. Hence, this uncertainty can impact how they calculate premiums and what policies are on offer. Understandably, insurers are constantly tweaking their numbers and policy terms and conditions.

Addressing these concerns calls for proactive insurance strategies that anticipate technological advancements and shifts in the market.

Insurance Options and Providers

Several insurance providers offer specialised products customised to EV owners’ unique needs. Typically, these policies cover:

• Accidents
• Theft
• Damage due to charging equipment malfunctions.

You may be able to secure extra coverage for alternative transport coverage if your EV can’t be charged due to a power cut. Some policies will specifically cover the risk of battery fires, too.

As your broker or adviser, we’ll work with you to consider and advise on factors such as coverage limits, deductible amounts, and the insurer’s reputation for customer service and claims handling. Having us help you with claims handling will give you peace of mind you won’t need as much time to deal with these issues as you would if you dealt directly with an insurer.

Incorporating EVs into Business Fleets

Your SME might consider integrating EVs into an existing fleet. Ensure you do your due diligence in strategic planning and investigating operational logistics. Get a feel for the long-term cost savings and environmental benefits of EVs and how they balance with your initial investment and streamline fleet management. Choose your EV model wisely – some components such as charging ports can be more prone to damage in minor collisions.

Insurance can get complicated if you’re managing a mixed fleet of traditional and electric vehicles. Such vehicles have different risk profiles so this is where customised insurance solutions can help address the range of operational needs and risk exposures.

Risk Management and Safety Considerations

Operating and EV or a fleet of them safely requires comprehensive risk management strategies. Invest in driver training programs specific to EVs as this can improve driver competence and their road safety. Install charging points in a safe, secure location on your premises, where possible to reduce the change of unauthorised use, vandalism or charging cable theft.

Technological advancements such as telematics and advanced driver-assistance systems (ADAS) also help boost EV safety and slim your insurance costs. ADAS monitors vehicle performance, enhance driver awareness, and minimises risks related to operating EVs.

Implementing best practices for EV maintenance is also key to reduce your risks and insurance claims. Ensure you plan for regular servicing and proactive maintenance routines to increase your EV lifespan and optimal operational efficiency. Such an approach helps you save overall on running an EV.

123 Insurance Pty Ltd ABN 67 621 727 722 ATF for 123 Insurance Unit Trust ABN 46 332 885 229 trading as Bell Partners Insurance is an authorised representative 1259573 of Insurance House Pty Ltd ABN 33 006 500 072 AFSL 240954.
This advice has been prepared without taking into account your personal objectives, financial situation or needs. You should therefore consider the appropriateness of the advice, in light of your objectives, financial situation or needs before following the advice. Please obtain a copy of, and consider the Product Disclosure Statement applicable to the general insurance product before making any decision.