Drivers Choosing Low Emissions Cars Might Lower Insurance Costs

The number of new cars registered in the third quarter of the year recorded a year-on-year decline, but sales of low emission cars increased strongly over the same period, according to new figures from the Department for Transport.

The quarterly Vehicle Licensing Statistics revealed 740,000 vehicles were registered for the first time in Great Britain in the three months to the end of September, 1% fewer than the same period last year. 

However, the number of ultra-low emission vehicles (ULEVs) registered spiked to 22,600, a rise of 39% on last year.

ULEVs now account for 3.1% of new vehicle registrations, with Battery Electric Vehicles the most popular type of ULEV with an annual increase of 234% – admittedly up from a very low starting point.

Diesel car registrations declined by 16% compared to the same period in 2018. This is the third successive year of double-digit percentage point declines, with diesel car third quarter registrations falling to 25% in 2019 from 47% in 2016. The interesting thing is that despite the constant scaremongering by politicians people are still buying diesel cars, albeit in lower volumes.

The reason is often that drivers need to commute long distances, run a small business etc and so clock up over 20,000 miles a year. The savings in fuel consumption therefore STILL make diesel the most affordable – and convenient – option for many private car owners/leasers and this is the bit the car industry and politicians don’t quite get. Busy people running a small business, or working at two or three locations per year for a big company, do not have time every two days to sit about drinking frappacinos for two hours, whilst the car re-charges.

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According to Greg Wilson, Founder of leading car insurance comparison website, Quotezone.co.uk:

“The impressive growth of drivers opting for an ultra-low emission car over a petrol or diesel motor is very welcome news – not only because these vehicles are better for the environment, but also because the growing number of ULEVs on Britain’s roads should gradually help to reduce the cost of insurance.

“Electric cars have historically cost considerably more to insure on average than their petrol and diesel counterparts. One of the reasons for the higher premiums was the lack of data insurers had about electric vehicles due to the relatively small numbers on UK’s roads.

“The lack of data about how much electric vehicles would cost to repair in the event of an accident, and how much damage they might inflict on other vehicles, and whether a driver opts for an electric car is more likely to be a safe driver, insurers were forced to increase their premiums to offset those unquantified risks.

“Electric cars offer motorists savings in a range of other areas including on fuel and road tax, but as their numbers begin to grow more quickly we should finally begin to see the cost of insuring them fall as well.”

“Whether you own an electric car, a diesel or a petrol vehicle, it’s vital that you compare quotes from a wide range of providers each time your insurance is due for renewal.”

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Insurance Edge Comment;

People are buying low emissions cars to avoid VED tax, and potential city ULEZ zone tolls -it really is as simple as that. Bristol, Edinburgh, Manchester and others will all copy London, in a desperate bid to grab revenue from those who are forced to enter city centres for work reasons.

But the real revolution in car insurance will be the replacement of the annual policy with a more flexible PAYG product, bought and assessed in real time via smartphone app. Extra data will be voluntarily traded by owners/renters of vehicles in order to get reduced premiums. As people move away from car ownership, the risk will vary according to the driver, the semi-autonomous tech inside the car and the route itself.

In the end, car insurance will be a driver policy, with the asset value becoming of lesser importance as people simply rent cars for the trips they deem necessary.

If you look at the rise of apps like Deliveroo and Just Eat, you see a population that is less willing than ever to venture onto clogged roads, even to purchase a takeaway. Driving has become a frustrating necessity, a chore to be endured, because public transport is unreliable, dirty and often dangerous. But the cost of owning a car in depreciation is now so high, that many people are giving up and leasing instead. They know that they’ll never actually own the car, but that’s OK, it is just a lifestyle accessory, a means to an end.

If car makers can sell the dream of rented prestige badge mobility, for a monthly fixed cost – including insurance – then insurers and brokers are big trouble. That is how close the car insurance market is to fundamental disruption, because this sea change in ownership, in aspirational purchasing, means that people will not invest emotionally in their cars in the future. Because they aren’t `their’ cars.

 

About alastair walker (3692 Articles)
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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