China’s Surge In Electric Vehicle Sales Has Increased Car Insurance Prices

Electric vehicles are becoming more and more popular as climate change continues to show its devastating impact in the forms of floods, tsunamis, earthquakes, and wildfires. This has urged a lot of people to take the initiative to change their lifestyle and make mindful choices. This change has also led to an increased demand for electric vehicles that enjoy the reputation of not only being great for the environment but also being easier to maintain and relatively less costly. However, local insurance firms in China believe otherwise. 

Kindel/Pexels | While the Chinese automobile industry is pushing out electric vehicles, insurance companies are increasing their rates to cover them

So, if you are interested in learning more about this insurance price hike in China, then keep on reading.

Why Is There An Insurance Price Hike?

Wenwen Chen, director at S&P Global Ratings and leads the research surrounding Chinese insurance, stated that the insurance premium for new energy cars is estimated to be 20% higher than insurance for regular fuel-powered cars. This includes electric vehicles as well. Chen also goes on to explain the numerous factors that go into pricing. She stated that the loss ratio tends to be higher for energy vehicles than for regular ones. The insurance companies have no choice but to charge more due to the increased cost for the insurers. The most prominent reason for the increase in higher loss ratios is due to the increased number of car accidents.

Ed/Pexels | This results in costing more since their parts are not mass-produced yet.

United States Insurance Prices

China is not the only country with increased car insurance prices. The United States of America witnessed an increase of 15% in insurance costs, mainly because electric cars are considered to be luxury cars. According to Chase Gardner, representative of Insurify, the repair costs are increased for these vehicles since many service centers don’t have qualified staff to repair and supervise the electric vehicles. While it is true that these electric vehicles come with low maintenance costs, one small accident can not only put a dent in your car but in your wallet as well.

Popular As Ever

While the insurance prices may have increased, it hasn’t stopped the Chinese population from getting their hands on the new energy passenger cars. It was reported by the China Passenger Car Association that from January to August, around 3.26 million new energy passenger cars were sold, breaking last year’s record by a whopping 25% increase! On the other hand, Electric vehicles are yet to tap into the mainstream auto market in the United States of America. 

Craig/Pexel | Electric vehicles, hybrids, and plug-in hybrids only come up to 11% of the light-duty vehicles in the states

With this increase in electric vehicle popularity, it won’t be long until these cars become the new traditional cars and lower insurance prices.