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Vehicle manufacturers need to work closely with insurers

7th January 2011

  • Greater public liability threat due to charging points
  • High value of batteries could create a new target for thieves
  • Ownership of batteries not clear

    Direct Line Car Insurance is calling for greater clarity from vehicle manufacturers on a number of issues surrounding electric vehicles. This follows the recent launch of more electric car models combined with Government plans to begin installing charging points in some of the major cities and giving motorists up to £5,000 towards the cost of a new electric vehicle.

    Insuring the new generation of proposed electric cars will be a challenge, as some batteries will be leased rather than purchased, leading to ownership issues and there is not yet the appropriate disposal and salvage arrangements in place for batteries, which would currently be classed as hazardous waste.

    The high value of the batteries may also create a potential new target for thieves and could also mean the battery is worth more than the vehicle itself in the event of an accident. The new generation of electric vehicles use advanced Lithium Ion batteries, such as those found in laptops and phones, (they are made up of a large number of cells) and can cost up to £25,000.

    Andy Goldby, Director of Motor Underwriting at Direct Line, said: “The recent increase in new electric cars coming on to the market demonstrates how vehicle manufacturers are seriously looking at reducing the impact cars have on the environment. However, this fundamental change to the car market needs to take into account the need for robust insurance products, to enable drivers to be confident that they have the appropriate cover in place.

    “Manufacturers and those encouraging the increased use of electric powered vehicles need to ensure that the entire infrastructure is in place to not just charge the batteries but repair them, dispose of them and reuse them. It is inevitable that electric cars, like any others, will be involved in accidents. At the moment insurers have not been involved in the proposals on how to deal with the batteries, the charging points and the potential dual ownership of the car. With the speed in which this market is developing it is critical these challenges are resolved.”

    The challenges Direct Line would like to see addressed are:

    Not all batteries will be owned by the customer, some will be owned by the vehicle manufacturer and leased to the customer. This is effectively dual ownership of the vehicle, making insurance more complicated.

    There is an increased public liability risk when a customer is charging their vehicle, laying the charging lead from the home out to the street or across the office car park.

    Appropriate salvage arrangements need to be in place and greater education on how the batteries can be dealt with.

    Many batteries are classed as hazardous waste when they are no longer useable or if the car has been written off; appropriate disposal facilities have to be available. The knowledge of repairing electric vehicles is very limited and appropriate access to training needs to be put in place as the market develops.

    For further information please contact:
    Simon Henrick
    Direct Line Press Office
    Tel: 0208 313 5965
    Mobile: 07833 166717
    Email: simon.henrick@rbs.co.uk

    Direct Line

    Started in 1985, Direct Line became the first UK insurance company to use the telephone as its main channel of communication. It provides car, home, travel and pet insurance cover direct to customers by phone or on-line.

    Direct Line general insurance policies are underwritten by U K Insurance Limited, Registered office: The Wharf, Neville Street, Leeds LS1 4AZ. Registered in England No 1179980. U K Insurance Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

    Direct Line and UK Insurance limited are both part of Direct Line Insurance Group plc. Customers can find out more about Direct Line products or get a quote by calling 0845 246 3761 or visiting www.directline.com