The development and uptake of new energy vehicles overseas (primarily in China and Europe) provides insight for adoption in Australia... Whether these electric vehicles will replace traditionally fuelled models appears a given in terms of environmental impact and long-term savings — so the insurance cover to meet the different risks and needs for EV insurance protections is being developed and refined now, ahead of projected demand from EV owners.

New energy vehicle risks call for new insurance solutions

Insurance essentials for new energy vehicles include the standard protections against property damage and theft but also present further exposures that insurers are developing solutions for.

These include

  • additional third party liability exposures created by charging activities
  • exposures related to renting batteries from third parties
  • considerations around the potential for government regulations to add new exposures
  • as well as appropriate cover for fleets, organisations, dealerships and the car companies themselves.

Other applicable services are also under development, covering areas such as risk and claims management such as

  • technology including risk controls, data and connectivity risks
  • reporting and KPIs
  • underwriting issues such as risk awareness and vehicle classification
  • roadside assist and extended electric vehicles services
  • establishing fault, battery value and salvage, warranty.

Some of the other factors influencing the development of appropriate new energy vehicles cover include

  • battery ownership and warranty
  • home/battery liability
  • rented battery liability
  • additional third party liability exposures created by charging activities
  • depreciation
  • vehicle classification
  • ride/car sharing
  • potential for government regulations to add new exposures.

Through our partnership with Allianz which is developing relevant insurance cover for new energy vehicles, our Gallagher brokers will soon be able to provide advice and guidance about applicable EV protections for Australian businesses.

The types of new energy vehicles available range through electric, hybrid, plug-in hybrid and hydrogen stored in a fuel cell. In addition to being much simpler mechanically (an electric vehicle has only three key components, the chief being the under-body battery) they offer much higher fuel cost economy and lower maintenance requirements.

Business and government car fleet buyers projected to drive early adoption numbers in Australia

In 2021 global sales of sales of both plug-in hybrid electric (PHEV), pure battery electric (BEV) continued to more than double each month on 2020 numbers, and according to the Federal Government's Future Fuels and Vehicles Strategy there will be 1.7 million electric vehicles on Australian roads by 2030. It's expected that fleet and government buyers will be early adopters — driven by the predicted savings in maintenance costs, rebates and other incentives, and the opportunity to reduce global CO2 emissions.

Businesses are likely to choose the energy vehicle type of fleet based on the required distances to be covered. For logistics operators logging around 200 kilometres a day in local deliveries an electric commercial van or utility vehicle should be adequate, while long distance heavy vehicles will need to run on hydrogen stored in a fuel cell.Hydrogen-powered buses are being built in Australia already, with heavy motor and long haul vehicles also expected.

Of course electric vehicles require different infrastructure to support them and funding for this is likely to be driven by the industries invested in the energy sources used. The government has budgeted $250 million to be invested in infrastructure development for public and household charging facilities. Commercial fleet incentives may involve co-investing with light and heavy vehicle fleets to instate the required infrastructure and state governments may also offer incentives.

Incentives for businesses to adopt new energy vehicles

While new energy vehicle sales still represent only a tiny percentage of the market most states and territories are offering incentives for vehicle owners to switch to new energy models.

These include rebates and subsidies for early adopters, stamp duty exemptions and reduced registration fees, which vary across the different states and territories. However, in some states these purchase incentives are also subject to additional taxes.

Benefit from informed advice

Through our partnership with Allianz, which is developing relevant insurance cover for new energy vehicles, our Gallagher brokers are able to provide advice and guidance about applicable protections for Australian businesses.

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