(Toronto) A new report suggests drivers could see higher premiums for their electric vehicles as the insurance industry adapts to the shift from gas-powered cars to electric alternatives.
Expensive electric vehicles and higher repair costs will likely lead the insurance industry to adjust premiums, similar to a trend in the United Kingdom, according to the Morningstar DBRS report.
In some cases, insurers prefer to condemn electric vehicles rather than repair them or replace expensive batteries, which will likely be more common and drive up insurance rates in Canada, according to the debt rating agency.
However, the pace of potential rate increases could be slower in Canada due to moderate adoption of electric vehicles and a lack of claims data, she adds.
The report also suggests that regulated auto insurance in Canada could mitigate draconian rate increases, particularly when an electric vehicle is registered for the first time.
Morningstar DBRS says changes to electric vehicle claims will not affect insurers’ profitability or credit ratings in the short to medium term, as the sector remains well funded.