Key guidance:  

• Collaboration between insurers and fleet organisations is essential for effective risk management.  

• Fleet operators should share as much data as possible with insurers to negotiate effective policy terms.  

• Telematics and data insights can help insurers better assess risk.  

• Both EV and historical ICE data can demonstrate that you are a low risk to an insurer. 

• Customisation is important as standard insurance policies may not fully meet the unique needs of public sector fleets.  

Role of insurance in EV fleets

Insurance plays a crucial role in helping public sector organisations adopt EVs safely.  

Industry bodies, such as the Association of British Insurers (ABI), actively shape policy development for EVs. This is supported by some of the largest insurance companies in the industry, ensuring there’s a collaborative approach to risk management and emerging trends.  

EVs benefit from advanced safety technologies such as Advanced Driver Assistance Systems (ADAS) and higher NCAP safety ratings. However, fleet operators should prioritise training their drivers on how to use these systems to ensure that vehicles are operated safely and efficiently.  

Challenges of insuring EVs

Insuring EVs presents several challenges. One of the most pressing issues is the high cost of repairs, caused by longer repair times, a shortage of specialised maintenance professionals, and the high cost of EV parts.  

• The EV repair market has fluctuating costs a lack due to a lack of historical data to inform pricing. 

• Fluctuating costs have also been caused by global supply chain disruptions, which have led to long delays in obtaining parts 

• During EV repair delays, insurance companies cover the cost of loaned vehicles, however, wait times for EVs are longer so the repair process for EVs can be lengthy. 

• The high cost of loaned vehicles can also drive-up the insurance premium during the next policy renewal period.   

• The complexity of EV components required for vehicle construction increases the cost of purchasing replacement parts for repairs.  

Battery-related concerns also impact insurance costs. There is no current consensus over the economic viability of battery recycling and second-hand market value, leading insurers to value risk-mitigation over financial asset protection. However, ongoing research into battery reuse and recycling means there are opportunities for future policy changes.  

Fire risk in EVs

ire risk is a concern in EV insurers, particularly with public sector organisations operating large fleets in urban and depot environments.  

• Misconceptions about EV fires persist, often fueled by incidents unrelated to EVs. 

• While battery electric vehicles are less likely to catch fire than ICE, they are more difficult to extinguish when they do.  

• Fire services require specialised training to handle these incidents, highlighting the need for improved fire risk mitigation and response strategies.  

Renault have developed systems to suppress thermal runaway, which is an important step in preventing battery-related fires. If this technology is adopted by other manufacturers, and insurers have data on its risk mitigation effectiveness, this could help address risks associated with EVs.  

Risk mitigation strategies

Insurers favour fleets that share the operational, claims, and future fleet replacement data that enables more accurate risk assessments and tailored policy offerings.  

Key risk mitigation measures include:  

• Using telematics and data-driven insights to reduce accident rates and claims.  

• Black box installations, driver training programmes, and on-board cameras that improve safety monitoring. 

• Stronger communication between insurers and public sector operators.  

Market dynamics and cost considerations

The insurance landscape for EV fleets is shaped by data and time limitations, EV confidence, and policy development.  

• Unlike ICE vehicles, EVs lack sufficient historical insurance data, making risk assessments more complex.

• While EVs are generally cheaper to operate than ICE vehicles, insurance costs remain a barrier for fleets looking to use EVs.  

• Despite strong safety features, EVs are often placed in higher insurance categories, which may not accurately reflect their actual risk levels.  

That being said, organisations with robust risk mitigation strategies for their fleets may not see a significant premium increase when transitioning to EVs.