Drivers may see higher premiums for their electric vehicles as the insurance industry adjusts to a broader shift from gas-powered cars to electric alternatives, a Morningstar DBRS report suggests. Charging bays are seen at the new Electrify America indoor electric vehicle charging station in San Francisco, Wednesday, Feb. 7, 2024. THE CANADIAN PRESS/AP-Eric Risberg
TORONTO – A new report suggests drivers may see higher premiums for their electric vehicles as the insurance industry adjusts to the shift from gas-powered cars to electric alternatives.
Costly EVs and higher costs of repairs are likely going to lead the insurance industry to adjust their premiums, similar to a trend in the U.K., the report by Morningstar DBRS says.
In some instances, insurers prefer totalling EVs over repairs or replacing expensive battery packs, something that is likely going to be more common and drive up insurance rates in Canada, the debt rating agency says.
However, the pace of potential rate increases may be slower in Canada amid moderate uptake for EVs and a lack of better claims data, it adds.
The report also suggests Canada’s regulated automobile insurance could mitigate drastic rate increases, especially when an EV is registered for the first time.
Morningstar DBRS says changes to claims on EVs are not going to affect insurers’ profitability or credit ratings in the near to medium term as the industry remains well funded.
This report by The Canadian Press was first published Feb. 12, 2024.
