An article written for CHAS Protect by Towergate Insurance Brokers
Why are firms considering electric vehicles?
The need to wean ourselves and our economy off fossil fuels is beyond doubt. The Climate Change Act 2008 (2050 Target Amendment) Order 2019 makes net zero by 2050 a legally binding target.
Businesses are having to focus on just what their own path to net zero will look like – with transport being a leading source of greenhouse gas emissions, businesses are now considering electrifying not just their car fleets, but also the vehicles they use for transporting goods and delivering services.
Whilst hydrogen-powered vehicles may one day dominate the heavier end of the transportation sector, at the light end, electrification of vans offers the most immediate opportunity. Over the next few years, switching to e-vans when purchasing a new vehicle will become much less of a choice.
Several manufacturers now offer fit-for-purpose electric vans (e-vans) that may be well-suited for operating range and working patterns that don’t create insurmountable charging-related issues. Some will have already taken the decision to invest in . Others will be considering whether an electric van might suit their needs, particularly if their work takes them into clean air zones.
The e-van purchasing decision
Whilst the need for zero tailpipe emissions is of unquestionable importance, e-vehicles do come at an environmental cost due to battery-related issues: lithium mining, battery production and after-life disposal. The key financial issue today for those considering an e-van purchase is whether it makes long-term financial sense to pay more for an EV compared with an internal combustion engine (ICE) vehicle. As well as the initial up-front cost, consideration needs to be given to battery deterioration over time and residual values.
Thought should also be given to current regulatory issues around the purchase of vans over 3.5 tonnes, up to 4.25 tonnes gross vehicle weight. The alternative fuel payload derogation due to the additional weight of batteries is a help, but at the time of writing, there remains a need for full alignment of 4.5 tonne EVs with 3.5 tonne diesel vans.
However, it may be prudent for a business to be aware of important insurance-related issues that may only become apparent when the time comes to arrange cover, or deal with a vehicle-related claim.
EV insurance cover issues
EVs have unique cover-related needs. Those after insurance cover for their electric vehicle should look for a policy that includes:
- Vehicle accessory cover that includes charging cables and equipment.
- Third party liability cover that includes the use of charging cables.
- Cover for owned or leased batteries.
- Cover for accidental damage to the battery that includes power surge damage whilst charging.
- Cover that includes like-for-like temporary replacement whilst the vehicle is being repaired following a claim under the policy (if desired).
- A policy excess that is not considered unreasonable / unaffordable.
- Out of charge roadside battery boost assistance or vehicle recovery, either under the motor policy or under separate breakdown cover.
- Wall box charger cover, either under the motor policy or under a property insurance policy.
If a van over 3.5 tonnes GVW, up to 4.25 tonnes, is being considered that will be driven by a person with a car licence, make sure the insurance cover caters for derogation as explained in the ‘e-van purchasing decision’ section.
What’s the greatest issue with EV batteries?
The risk of ‘thermal runaway’ is unique to electric vehicles. Even if not an immediate consequence of an incident, the risk of thermal runaway remains for up to 48 hours. During that time, a vehicle must be isolated and monitored, raising significant safety and storage issues.
Today, insurers are becoming increasingly aware of the risk of thermal runaway, a risk that has resulted in some insurers ceasing to insure EVs, and others increasing premiums significantly. Tomorrow, the risks of thermal runaway are likely to lessen when currently-under-development solid-state lithium batteries become available.
Conclusion:
The drive to net zero is a vital goal, and both consumers and businesses have an increasing role in this. Pressure is growing on businesses to take positive steps to drive down carbon emissions, while businesses with vans need to be considering when they’re going to make the switch to zero emission vehicles. Making that switch today requires consideration of not just the up-front investment issue considerations, but the wider issues surrounding ownership, maintenance, repair and safety.
For more information about obtaining a quote for your business or motor insurance from the team at CHAS Protect, please visit Comprehensive Insurance Solutions | CHAS Protect
CHAS Protect and Towergate Insurance are trading names of Advisory Insurance Brokers Limited. Registered in England with company number 4043759. VAT Registration Number: 447284724. Registered Address: 2 Minster Court, Mincing Lane, London EC3R 7PD. Authorised and regulated by the Financial Conduct Authority
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