Micro Real Estate

EV Charger Insurance and Understanding Your Electric Vehicle Insurance

Broken EV Charger

With the emergence of electric vehicles (EVs) and EV chargers, consumers have plenty of questions when it comes to the related costs of going electric – ever think about EV charger insurance? One advantage that gas-powered cars currently have over EVs is that industry standards have been set for years. The maintenance costs of owning a gas-powered car are known, the process of buying car insurance and rates have been standardized, and the current infrastructure is built to handle gas-powered cars, not electric.

One of the biggest question marks consumers have about EVs and EV chargers is insurance. With EVs and EV chargers, there are several related costs and liabilities that owners and insurance companies need to account for, which can complicate the insurance process. For instance, EV and EV charger owners put more stress on their existing electrical infrastructures. Further, storing a giant lithium-ion battery in a home garage can pose a serious fire risk. EV chargers can also vary widely in cost and EV chargers may require maintenance over time (especially on a commercial property), so there is no blanket answer to how much insurance coverage you may need.

Before heading to your local Tesla or Ford dealer in the hopes of saving a few extra bucks a year on gas, you should consider one of the biggest additional costs to your EV or EV charger purchase, insurance. Below is a quick guide to what is involved in the insurance process and how you can prepare yourself or your business to go electric.

Insuring Your Electric Vehicle

Expect an Increase in Your Car Insurance

With newer technology and greater potential risks, it is extremely likely that your car insurance premiums will increase when buying an EV. For starters, the average cost to insure a gas-powered car in the U.S. is around $193 a month. However, even for Hybrid vehicles, the average cost jumps up to $230 a month, and even more for EVs which can cost more than $317 a month on average. At the end of the day, EV owners can expect on average a 64% increase in their monthly insurance costs.

Electric Vehicles tend to have higher insurance premiums
Comparison Between Similar EV and Gas vehicle insurance premiums

Table Source

What Makes EV Insurance So Expensive?

While coming to terms with the increased insurance costs for owning an EV can be difficult, there are some pretty good reasons insurers charge a higher premium. The biggest factor in the higher premiums comes from the higher prices that EVs command in the market and the cost of repairing the EV itself. Since EVs are a newer technology, there are fewer available parts on the market and the parts are generally more expensive to manufacture.

The high prices of EV parts cause another problem when EVs are in an accident. Since current EV models are so expensive to fix due to a shortage of cheap parts and an experienced labor force, it is usually cheaper for insurance companies to consider the car ‘totaled’ rather than fixing it. There are hundreds of cases every year where minor crashes can lead to an EV being considered ‘totaled’ since the cost of replacing parts like the bumper or side paneling are too high for insurers to bear.

The good news is that insurance costs are expected to drop over the next few years. As more (Rivian, Lucid, etc) and larger manufacturers like Ford and Chevrolet enter the EV market in force, the increase of EVs on the roads will mean that more spare parts will be manufactured making it cheaper to maintain and repair. However, due to recent supply-chain shortages, the cost of manufacturing parts is expected to remain relatively high for the next few years, so EV owners shouldn’t expect any major insurance breaks too soon.

How Are Other Insurance Policies Affected

With stories of EVs spontaneously catching on fire in the past few years, it’s important to understand whether your home insurance or renters’ insurance will cover such an accident. In general, policies will in fact cover most house fires.

For the most part, EVs compared to hybrid and gas-powered cars pose less of a fire risk. According to data from the National Transportation Safety Board in 2021, there were only 25 EV fires per 100,000 cars, compared with 3,475 hybrid vehicle fires, and 1,530 gas-powered car fires per 100,000 cars, respectively. Therefore, simply owning an EV should not increase your home insurance policy drastically.

What will cause an increase to your home insurance policy is upgrading your home’s electrical infrastructure to charge your EV. Many owners will install a level 2 charger, and some even install solar panels to help offset the rising energy costs associated with owning an EV.

With these added modifications to the home, EV owners can expect a rise in home insurance costs since the roofs and improvements can be extremely expensive. However, the increases in your insurance policy should only be a small percentage.

To ensure that your home and insurance costs stay low, it’s best to hire a professional when making any serious home modifications. Even installing an EV charging port into your garage can be catastrophic when done improperly. With the high voltage requirements and long charging times required by EVs, it’s crucial to make sure your home improvements follow all federal and state safety guidelines.

What to Expect when Insuring your Electric Vehicle

Getting a comprehensive insurance policy for your EV is easy, but definitely comes with an added expense. Due to the high costs of labor and parts, EV owners will almost always pay a higher premium than non-EV owners. However, not every EV is going to cause a humongous jump in premiums. Similar to gas-powered cars, EVs that are cheaper to buy are cheaper to insure. For instance, the Tesla Model 3 is cheaper to insure than the Model Y because it is a smaller car with a lower retail price. The same can be said for models like the Porsche Taycan, which is considered a sports car and will be more expensive to insure.

Further, before buying an EV, consumers should look at their home’s electrical system and insurance policy as well. Many EV owners opt for a Level 2 charger in their homes which may require an upgrade that can cost thousands of dollars. Therefore, consumers should review their home’s insurance policy to determine what is covered and how much improvements can increase their monthly insurance bill.

Insuring Your EV Charger

With the rise of EV ownership, EV chargers are becoming more prominent in homes and commercial properties. EV chargers have become important tools for property owners to help draw in more business and provide another source of income in some cases.

For both homeowners and property owners who install an EV charger, fortunately, insurance companies have updated their policies to provide coverage. However, depending on the type of charger, property, and related accessories like security cameras, the price of insurance can greatly vary.

Insuring EV Chargers on Commercial Properties

When it comes to EV chargers, most chargers that require complex installations and upgrades are found on commercial properties. Some EV chargers are independently owned by various businesses and property owners while others are owned by utility or car companies. For instance, Tesla owns and operates thousands of charging stations across North America, Europe, and Asia that are specifically designed for their Tesla cars.

EV charging stations that are owned by utility or car companies generally take ownership of the insurance. Therefore, when it comes to maintenance, theft, vandalism, or injuries, the property owner where these EV charging stations exist are not responsible for the damages and insurance. However, independent owners of EV chargers should have insurance that covers the chargers themselves.

Equipment is a Factor for Insurance Companies

When it comes to insuring an EV charger, the main factor is the type of cable that the charger uses to connect to the car. Some EV owners have their own portable cables that they plug into public EV chargers while others don’t. Because of this, EV charger owners are expected to have a set of universal charging cords and adapters, although it’s not required.

The most common issue that insurance companies care about is the vandalism or theft of these charging cables. Unfortunately, the copper inside these charging cables can easily be stripped and sold to junkyards for a profit, making them an easy target for criminals. EV charging stations are light enough for one person to lift, so it’s possible for EV chargers to “walk away” if not mounted securely.

While most EV charger insurance policies include cord replacement in case of theft or vandalism, repeated incidents can cause rates to rise or termination of the insurance policy altogether. In major cities or high-crime areas, this can be a major factor when property owners are shopping for an insurance policy. In fact, many EV charger owners in these scenarios will opt for providing charging cords and leave the responsibility of the charging cord up to the EV owner.

EV Charger Policies are Still Being Standardized

One of the downsides of EV and EV charger ownership is because of how new the technology is, processes, litigation, and policies have not been standardized the same way it has been for gas-powered cars and related services. This leads to several areas where claims may cause conflict among insurance companies. For instance, if a person is injured by tripping over a charging cable, is the EV charger owner responsible? Because of how new these problems are, there is still much uncertainty when insuring EV chargers.

Because of this, it is important for EV charger owners to have a comprehensive understanding of their insurance policy. In scenarios where an EV owner brings their own charging cord and has an accident, any number of insurance policies could be on the hook for the damage including the EV owner’s personal liability insurance, the driver’s automobile insurance, and even the property owner’s EV charger insurance.

Can EV Owners Recoup Losses from Business Interruptions?

While EVs are meant to reduce the world’s reliance on fossil fuels and mitigate pollution, the increase in EVs can put a humongous strain on existing electrical grids. Since current electrical infrastructure is considered unable to handle the upcoming demands of EVs, property owners are recommended to expect an increase in power outages and rolling blackouts. We have already seen these scenarios come into existence in California, where energy companies will induce blackouts to limit fire risks during dry seasons and windy conditions.

As the world waits for electrical infrastructure to be upgraded, EV charger owners should prepare for the likelihood of electrical interruptions. While free-standing stations bear less risk in this regard, large properties like malls, apartment buildings, and parking garages should be ready for these circumstances.

It’s important for EV charger owners to understand how the grid works on a daily basis. For instance, transformers tend to cool down in the later hours of the day. This means that cooler temperatures and lower energy usage give these transformed a chance to recharge and cool down. Unfortunately, EVs are usually charged during the day and require charging late at night, meaning that transformers may not get the energy break that’s required for good maintenance. Ultimately, this can lead to your EV charger needing repairs over time.

Whatever causes a loss of power, in general, your EV charger will need to be completely shut down. Luckily, some insurance policies do offer coverage for loss of business, but it can depend on the insurance company. Additionally, EV charger owners should look for policies that include coverage for the transformer itself and other victims of any potential power outage. This can help mitigate the cost of loss of business and damages that may occur during a power outage.

What to Expect When Insuring an EV Charger

All EV chargers should be covered by some insurance policy. If you’re a property owner that is home to an owned and operated EV charging station, then the owner is usually responsible for insuring the EV chargers themselves. However, if you’re a property owner that installs an EV charger, then you will need to get an insurance policy that covers EV chargers. You can find out more about EV chargers and other forms of micro real estate on this website.

Because the technology is so new, EV charger owners will likely need to shop around to find a comprehensive policy that covers all sorts of scenarios. While it might be more expensive, since the industry and its’ policies have not been standardized, having a more expensive policy will likely provide more coverage and mitigate potential risks in the long run.

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