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Brexit and High Insurance Costs Dent Interest in EVs

2019-01-03 11:20 Thursday

As the date for Brexit draws closer, the UK Government has been drafting "technical guidance" to explain what Brexit will mean for drivers in the UK.

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The government has assured drivers that they can still drive on the continent, but the guidance also warns that additional paperwork and border checks will be needed.

Currently, all UK drivers with insurance are automatically covered to drive in all of the countries within the European Economic Area (EEA), as well as Andorra, Serbia and Switzerland. According to the technical guidelines, all UK motor insurance providers will have to provide third party motor insurance cover for travel to EEA countries once the UK officially leaves the EU.

However, the UK will no longer participate in the EU's open border policy, and drivers will need to carry documentation and should expect to have it checked at border stations. Without the benefits associated with open borders, UK drivers will need to purchase local insurance in the country that they enter, also known as frontier insurance, or risk fines and related penalties.

Due to the high cost of insuring electric vehicles, and the new complications associated with Brexit, UK consumers are increasingly reluctant to purchase them. As a result, pure electric car registrations in the UK declined by more than 3% from January to June 2018 when compared with the first half of 2017. According to the Society of Motor Manufacturers and Traders in the UK, there were more than 1.2 million petrol and diesel cars registered between January and June 2018, but only 7,441 electric cars over the same period.

According to UK insurance market analysts, pure electric cars are comparatively expensive to insure comprehensively. Insurance rates for some models are up to 60% more expensive than those for petrol or diesel cars; some insurers even demand more than £1,800 for 12 months of coverage.

Young professionals are the primary demographic for electric vehicles, but they are also the most cost-oriented consumers. The UK electric vehicle market still retains a great deal of promise, but until roadblocks in the form of Brexit and high insurance rates are resolved, most consumers will still opt for traditional diesel cars.

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