Fleet insurance has long been an important insurance cover for businesses with motor fleets. As electric vehicles (EVs) gain traction in Australia, fleet managers are beginning to ask important questions about insurance coverage and costs. To address these concerns, we sat down with Richard Sandow, Portfolio Manager – Commercial Fleet and Engineering at Vero, in episode three of the fourth season of the Fleet News Group podcast series, to discuss the company’s latest enhancements to its motor fleet insurance, to help with insurance cover for fleets transitioning to EVs.
Vero’s Role in Fleet Insurance
Vero Insurance, a respected commercial insurance brand has been a key player in motor fleet insurance for decades. “Vero offers a broad range of commercial products that help businesses mitigate their insurance risks,” Sandow explains. “Fleet insurance, referred to as motor fleet in the insurance world, has been a core product of ours for a couple of decades now, serving businesses and fleet managers with a minimum of 15 vehicles.”
Unlike personal vehicle insurance, fleet insurance policies are structured to provide cover for all fleet vehicles and their drivers under a single policy. “The main benefit of a fleet policy is that it simplifies the cover for businesses that have many drivers—employees, directors, or contractors—who regularly drive any of the vehicles in their fleet,” he adds.
Why Vero is Enhancing its Motor Fleet Insurance Offering to consider EVs
With EV adoption on the rise globally, fleet operators in Australia are beginning to explore their options. However, Sandow acknowledges that some businesses remain hesitant. “We know that Australia and New Zealand are slightly earlier in the adoption cycle,” he says. “But this is changing, especially with novated leasing clients struggling to keep up with EV demand. About 50 to 70% of all new vehicle orders in Australia are now electric, largely due to the Fringe Benefits Tax (FBT) government exemptions.”
Despite this demand, fleet managers are still weighing key considerations such as EV costs, residual values, and charging infrastructure. “Until recently, early EV models were quite expensive due to new technology, and their residual values were falling faster than ICE (Internal Combustion Engine) vehicles. Another concern has been the perceived lack of public charging infrastructure, particularly for fleets covering long distances,” Sandow notes.
Key Enhancements in Vero’s Fleet Insurance for EVs
Vero has introduced several key enhancements to its motor fleet product that may help provide fleet managers with confidence in their transition to EVs. Sandow explains, “One of the biggest considerations for EVs is that the battery is the motor. If this fails or runs out of charge, the vehicle is essentially stranded. So, we’ve introduced an excess-free towing benefit, covering reasonable costs to tow a fully electric vehicle that runs out of charge to the nearest charging station.”
Other important updates include coverage for risks associated with charging. “Unlike refuelling a petrol vehicle, which takes a few minutes and is usually attended, EV owners often plug in their chargers and walk away. This potentially increases the risks of trips and falls, which is where liability cover can be handy at both public and private charging stations,” he explains.
Additionally, Vero’s enhanced policy provides cover for resultant damage that may occur while charging at a public or private charging station. “If an EV battery combusts during the charging process, it could lead to vehicle damage and/or third-party property damage. We wanted to give customers peace of mind that they are insured for these types of exposures,” Sandow says.
How Insurance Premiums for EVs are Determined
A common question among fleet managers is how insurance premiums for EVs are calculated. According to Sandow, the methodology remains largely the same as for ICE vehicles. “Many factors come into play to make up a vehicle’s premium, these include the vehicle’s make, model, year, insured value, claims history, and macroeconomic trends such as the cost and availability of parts.”
One of the biggest challenges currently facing the industry is the rising cost of vehicle repairs. “Previously, if you damaged a bumper, it was a simple repair. Now, with ADAS (Advanced Driver Assistance Systems), a bumper replacement might involve repairing or replacing sensors and cameras, costing thousands of dollars,” he notes. “While safety technology is reducing incidents, repair costs are rising, which can impact premiums.”
Addressing Concerns Around EV Fires
One of the most debated topics surrounding EVs is the risk of fires. However, Sandow brings clarity to the conversation. “From 2010 to 2023, there were only six reported EV fires in Australia. By comparison, in New South Wales alone, there were over 3,000 internal combustion engine (ICE) vehicle fires during the same period,” he states. “The data is irrefutable—EVs are less likely to catch fire than ICE vehicles.”
Moreover, none of the six EV fires were spontaneous; all were caused by impact damage or charging issues. “That said, when an EV fire does occur, it can be more severe due to the high temperatures of lithium-ion batteries. This is something we monitor closely, but the low frequency means it doesn’t have a major impact on premium affordability,” he reassures.
The Future of EVs in Australia
Looking ahead, Sandow anticipates significant growth in EV adoption. “BYD has a goal to outsell Toyota in Australia by 2030, which is a bold ambition,” he says. “As Chinese manufacturers continue to introduce affordable EV models, and as battery technology improves, we’ll likely see increased adoption, especially among businesses.”
Government incentives will also play a role. “We’ve seen programs like the FBT exemption and New South Wales’ $18 million EV pilot incentive. More such initiatives could accelerate the transition,” he predicts. “However, the biggest piece of the puzzle remains charging infrastructure. Businesses need confidence that their fleets can operate seamlessly, with adequate charging points for long-distance travel.”
With evolving technology and increasing market competition, EV adoption is set to accelerate. “We’re still early in the cycle, but Vero wanted to get ahead of the curve with enhancements in cover for EVs to help give customers confidence in making the transition,” Sandow says. “At the end of the day, our goal is to support fleet managers in managing insurance risks and ensuring smooth operations.”
For fleet managers considering the shift to EVs, having motor fleet insurance with cover that consider EVs is an important step in the journey toward a more sustainable future.
Insurance issued by AAI Limited ABN 48 005 297 807 trading as Vero Insurance. Read the Product Disclosure Statement before buying this insurance. Go to vero.com.au for a copy. Target Market Determination is also available. Any advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it. The information is intended to be of a general nature only. Subject to any rights you may have under any law, Vero Insurance does not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, incurred as a result of reliance upon it – please make your own enquiries.
