GlobalData surveying has found that over a quarter of UK consumers are hesitant to purchase an electric vehicle (EV) due to higher insurance premiums. Meanwhile, The Green Insurer has urged the UK Government to consider eliminating or lowering the 12% Insurance Premium Tax (IPT) on EV car insurance to promote greater adoption of eco-friendly vehicles.
According to GlobalData’s 2024 Emerging Trends Insurance Consumer Survey, 27.4% of UK consumers report that high insurance premiums deter them from transitioning to a fully electric vehicle. While other factors, such as the high purchase price and uncertain resale value (56.7%), limited public charging infrastructure (45.9%), and lengthy charging times (42.8%), represent larger barriers to adoption, insurance costs remain a significant contributor to the hesitancy surrounding EV uptake. For example, in May 2024, Confused.com found that the average cost of insuring an EV was £910, compared to £790 for a hybrid car and £670 for a petrol or diesel car.
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The Green Insurer has urged the UK Government to consider reducing or abolishing the 12% IPT on car insurance for EVs to encourage broader adoption of environmentally friendly transportation. Its research reveals that 36% of motorists would be more likely to switch from petrol or diesel vehicles to EVs if the IPT were removed. The Green Insurer also highlighted that while IPT has doubled over the past decade—from 6% to 12%—and generated £8.15bn in government revenue last year, reducing or eliminating this tax could serve as a crucial incentive to accelerate the transition to EVs. In addition to government action, insurers can play a significant role in driving EV adoption. They can introduce tailored policies with lower premiums for EV owners, reflecting the typically lower maintenance and environmental impact of these vehicles. By offering specialised coverage for EV-specific risks, such as battery damage or charging infrastructure, insurers can address potential concerns and provide comprehensive protection. Collaborating with governments to advocate for tax incentives such as IPT reductions would further enhance affordability and make EV ownership more accessible to a broader range of consumers.
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