Remove insurance tax to boost electric car uptake say buyers

Richard Aucock, Contributor
Wed, 23 Oct 2024

Removing the 12% Insurance Premium Tax on electric cars would encourage more than a third of motorists to replace their petrol and diesel car with an EV, a survey has revealed.

The Insurance Premium Tax, or IPT, is added to all general insurance premiums. It has doubled from 6% to 12% in the past decade, and raised £8.1bn for the government last year.

As the government seeks to drive up electric car registrations with the ZEV Mandate, The Green Insurer believes removing IPT on EV policies could be an easy incentive for it to adopt.

It would be of particular appeal to drivers who are concerned about the affordability of electric cars – 60% said the higher cost of EVs was a reason why they weren’t considering one.

More than 1 in 2 were also worried about battery replacement costs, a third worried about servicing costs, while 23% were concerned EV insurance premiums would be higher.

"Labour’s commitment to reinstating the 2030 ban on the sale of new petrol and diesel cars is laudable, but it’s also clear that there remains a real need to make EVs a more affordable choice for many drivers,” says The Green Insurer CEO Paul Baxter.

Earlier this year, it conducted research that reveals 62% of UK adults are supportive of a move to reduce insurance costs for those drivers who are opting to drive greener vehicles.

Baxter acknowledged that reducing IPT revenue may be unpalatable in the current climate, but is convinced that more short-term action such as this is needed to help accelerate EV take-up.

However, it won’t be the solution for everyone, with the survey also finding that 52% would not be encouraged to make the switch even if a cut in IPT made EV car insurance cheaper…  

Ask HJ

I'm no longer able to drive - can I insure my car for two named drivers?

I’m no longer able to drive after a stroke. Can I insure my car for two named drivers one of which has a car wile the other is named on two other vehicles? My car will only be used occasionally.

Yes, you can insure your car with two named drivers, even if you are no longer able to drive. It’s important to be clear with your insurer about how frequently the vehicle will be used, as this will influence the terms of the policy. The second driver, who is already named on two other vehicles, can be added to your policy, but their status on other cars should be disclosed to ensure all policies align and prevent complications with multiple insurance claims. You might want to consider a “named driver policy”, as the car will not be in constant use. You will be the owner of the vehicle but will be classified as a non-driving policyholder. However, the most important thing is to be honest with your insurer about your health situation, the fact that you will not be driving, and how often the named drivers will be using the car. This will ensure your policy is valid, and there are no issues in the event of a claim.

Answered by Rhydian Jones

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