EV insurance claims are low but cost to repair is high, CCC

An increase in battery-electric vehicle sales and ongoing supply chain issues may slow down insurance claims processes and collision repairs, according to a recent report from CCC Intelligent Solutions. EV sales accounted for 4.6% of new light vehicle registrations during the first quarter of 2022, and, subsequently, make up just 0.86% of auto claims thus far. 

Though the volume of EV auto claims is much lower than that of traditional internal combustion engine (ICE) vehicles, findings indicate that the average total repair cost for EVs is higher than non-EVs, and even luxury non-EV models. 

“From a claims perspective, I think an EV is just one of several new technologies that is going to require the adjusters, insurance companies, underwriters and repairers to all get up to speed on the characteristics that are unique to those vehicles,” says Susanna Gotsch, Senior Director of Insights and Analytics at CCC. 

The CCC report analyzed two subsets of vehicles to compare the repair cost and repair productivity of EVs and ICE models; metrics in the analysis included original equipment manufacturer (OEM) part usage, the repair or replacement of parts, length of repair time, repairer productivity and total cost. 

Auto claim data was compared for collision losses from driveable vehicles that experienced frontal impacts. The first subset included small non-luxury vehicles that are available as both EV or ICE models, or ICE vehicles similar to models only available as EVs, and the second subset included the same but for midsize luxury SUVs. Data from the analysis indicates that, overall, EV models produce a higher average repair cost, longer repair times and lower repairer productivity compared to ICE vehicles. 

Longer repair times and lower repairer productivity are likely a result of the lack of experience and knowledge from repair shops.

“Anytime there's new technology that is introduced, it takes a while for the repairers to get up to speed and to have full staff that has been fully trained, has all the tooling, has all the training and is comfortable and can repair those at the same level of speed and efficiency as some of the other vehicles that they've been repairing for a lot longer,” explains Gotsch. 

Higher utilization of OEM parts and repairs is a factor that likely leads to higher EV repair costs. Most EVs use advanced driver-assistance systems (ADAS), and repair operations often include scanning and calibration. EVs also show a higher percentage returned for additional repairs after the customer initially picked the vehicle up from the shop – another contributing factor to EVs’ lower net promoter score. Issues in the supply chain, too, are ramping up repair costs. 

“Almost all [EVs] still use lithium-ion batteries. Lithium is a very expensive material and hard to come by, and in a lot of demand. Other materials like cobalt… are a little bit harder to come by and are rare earth materials that are also used in computers and things like that. There's a lot of competition for those materials,” Gotsch explains. “The cost of those raw materials have gone up, driving up the cost of EVs.”

According to Gotsch, analysts predict continued increased EV sales – and repairers will have to adjust. 

“To be able to repair an EV, there's a fair amount of investments that have to be made. [Repairers] need to invest not only in the training for their technicians…they also have to purchase different types of equipment, like the personal protection equipment, and they have to ensure that their electric capacity within the facility is set up so that they can do things like fast charging,” notes Gotsch. “All of those things require an investment. So, a repairer really has to make a decision to determine if the return on investment is going to be there.”