EV owners likely to pay more for insurance, report says. Here’s why
Global News
Owners of electric vehicles in Canada may start to see their insurance rates jolt in the coming years, a new report indicates. Here's why.
Electric vehicle (EV) owners in Canada may start to see their insurance rates jolt in the coming years, a new report indicates.
The study by credit rating agency Morningstar DBRS suggests insurers in the U.K., Europe and parts of the U.S., where EV uptake is higher than in Canada, are starting to experience the impacts the EV transition is having on claims costs.
“The rates (in Canada) haven’t changed significantly when compared to regular internal combustion engine cars. It’s still the same, and the reason is because there’s a low uptake of electric cars in Canada compared to Europe, the U.S. and other jurisdictions,” said the report’s co-author, Victor Adesanya, vice president of insurance credit ratings at Morningstar DBRS.
“Right now, it’s not an issue, because they have fewer cars on the road, but as time goes on … then it could be an issue.”
The report notes that Canada’s EV transition has not been as rapid as compared with the U.K. and Europe, where sales have grown exponentially since 2019, boosted by government incentives for buyers and material investment in charging infrastructure, the report indicates.
Ottawa has mandated that by 2035, all new vehicles sold in Canada must be emissions-free. In two years, 20 per cent of all cars sold must be zero emissions. It has laid out a road map of how to get there, but critics have said it’s unrealistic.
According to Statistics Canada’s most recent data, EVs accounted for three per cent of light-duty vehicle registrations in 2022, up from 2.3 per cent in 2021. The total number of road motor vehicles registered in Canada was 26.3 million in 2022, and light-duty vehicles accounted for 91.7 per cent of that figure.
Since EVs are relatively new to the market, insurers here do not have enough historical claims data to accurately estimate lifecycle durability, maintenance and repair costs, the Morningstar report said.
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