John Lewis has halted its insurance offerings for electric car owners due to concerns about the expense of repairs.
John Lewis Financial Services, the financial arm of the department store, is suspending new coverage or renewals for battery-powered vehicles. This comes as its underwriter, Covéa, evaluates the associated risks and costs.
The insurance sector is grappling with increasing vehicle repair charges, which are impacting their profitability. Data from the Association of British Insurers (ABI) shows that vehicle repair expenses surged by 33% in the first quarter of 2023, compared to 2022, leading to historically high annual premiums.
Electric vehicles are notably more costly to mend, with repair expenses being around 25% higher on average than those for petrol or diesel cars, as per findings from Thatcham Research, a prominent research center in the automotive field.
There’s heightened concern regarding the batteries of electric vehicles. They are typically situated on the vehicle’s floor, making them more susceptible to damage, even in minor incidents like hitting a curb
Copart, a notable auction platform, reports that about half of the low-mileage electric vehicles they’ve salvaged experienced slight battery damage.
The battery typically constitutes the priciest component of an electric car, potentially making up to 50% of the car’s worth, with prices ranging from £14,200 to £29,500.
Additionally, there’s a notable lack of technicians equipped with the know-how to perform these repairs.
The Institute of the Motor Industry (IMI) indicates that 39,000 UK mechanics are certified to handle electric cars. Yet, with the surge in electric vehicle adoption, IMI predicts a potential deficit of about 16,000 skilled mechanics by 2032.
Data from the Society of Motor Manufacturers & Traders (SMMT) highlights that 193,221 electric vehicles were registered in the UK in the year leading to August. This reflects a 40% increase compared to the previous year’s corresponding period.
A representative from John Lewis Financial Services stated, “Our underwriting team is momentarily halting the issuance of new policies and renewals for fully electric vehicles as they evaluate the associated risks and costs.”
This development follows Rishi Sunak’s recent announcement to postpone the intended prohibition on sales of new petrol cars from 2030 to 2035, marking a step back from some of his earlier environmental commitments.
An ABI spokesperson commented, “Our members are in full support of the electric vehicle roll-out and the move towards net zero. Deciding whether to provide insurance and at what rate, remains a business choice for insurers, dictated by their risk assessment.”
Covéa was reached out to for their views.
