Electric vehicles and the future of Car Insurance in South Africa

As more South African drivers switch to electric vehicles, insurance companies are having to adjust to unique risks and opportunities. However, over time, the progression of car insurance will be exemplified by a number of factors, ensuring that coverage evolves with every vehicle advancement.

Electric vehicles: What does the future look like for Car Insurance?

Naamsa’s quarterly review for Q1 2024 , reported a substantial increase in new energy vehicle (NEV) sales in comparison to the previous year. Approximately 3,042 EVs were sold in South Africa between January and March 2024, compared to 1,665 vehicles sold during the same period in 2023. This represents an increase of nearly 83%.

With that said, both insurers and policyholders should keep informed as South Africa adapts to evolving automotive technologies.

Insuring petrol cars vs. electric vehicles: key differences

When it comes to insuring electric cars, there aren’t many changes in the way coverage is concerned. For example, comprehensive and liability coverage both offer the same protection from collision-related accidents. 

However, electric cars are known to have expensive parts and will mean a higher limit with Comprehensive Insurance coverage, a more costly option for EVs opposed to their petrol counterparts. With their unique components, these vehicles will require unique coverage. The differences that petrol driven cars and EV’s face will have insurance providers evaluate their approach to insurance risk, tailored to suit both petrol and EVs. 

The common factors will still remain, such as the driver’s road behaviour, age, history, and location – outlining the likelihood of potential accidents and other risks. 

Risks to consider 

Factors that add to the risk of EV insurance will vary.

• If anything were to happen to a charging station (weather, theft, damage, DDoS attacks), this would negatively affect the vehicles battery and electrical system. 
• One can only bet that the price that comes with charging equipment doesn’t come cheap, and (touch wood) anything crime-related had to happen to the equipment. However, things like identity theft or robbery while waiting to use the charging station can become a little more complicated to cover.
• To mitigate the risks, insurance providers will need to determine how the risks are handled and who will be responsible in the event of an incident. 
• Public charging station availability will influence the cost of your coverage.

Understanding the obstacles can help you determine what coverage that best suits your needs, as well as protect you from the aforementioned risks. You also might find that some EV manufacturers will give their own insurance policies, tailored to cover the vehicle.

Car Insurance and the future ahead

Trends and Developments

• Telematics and usage-based insurance: insurers can offer usage-based insurance where premiums are based on driving behaviour. This is especially relevant for EVs, which often come with built-in telematics systems.

• Insurance for autonomous vehicles: As electric cars become more autonomous, insurance policies will need to evolve. This would then allow insurers to address liability - if and when accidents ever had to happen - where self-driving features are involved.

• Tailored EV insurance products: Insurers are developing specialised products tailored to EVs, covering specific risks such as battery degradation, charging station damage, and software updates.

• Green discounts: Some insurers are may even offer “green discounts” for EV owners, an incentive that aims to encourage eco-friendly vehicle adoption.
 

Challenges for Insurers

• Data and actuarial models:  In order to develop accurate actuarial models, insurers will need to collect a great deal of data on EV performance and risks. This takes new risk factors associated with EV technology into account.

• Market adaptation: Insurers must adapt to automotive progression. This includes regulatory changes and advancements in EV technology.

Quotes for Car Insurance in South Africa

Whether it’s electric vehicles or traditional petrol-powered cars, you’ll still want to get the best quote for Car Insurance regardless. 

MotorHappy will help you compare quotes from various insurance providers so that you can budget and plan accordingly, giving you peace of mind for the journey ahead.