Electric Vehicles: A Use Case for UBI

EVs bring to light some potentially interesting implications on auto insurance. They could represent a prime use case for a new type of embedded usage-based insurance policy.

Electric vehicles just might be the next ticking time bomb threatening to blow up the loss ratios of incumbent insurers.

Today, their overall impact on premiums and loss ratios is masked because EVs are a small slice of the overall pie, representing only about 6% of new vehicles sold in the U.S. in 2021. But, with this number doubling every year for the past three years, we could be seeing the beginning of an exponential adoption curve.

With government incentives piling up, consumer demand growing and global production capacity increasing -- it seems to be a matter of when, not if, for EVs. But recent industry research points to significantly higher collision repair costs for EVs, when compared with gas vehicles.

EVs will continue to have a growing impact on those who do not understand and plan for the insurance implications.