Latvia’s vehicle insurance market is seeing a notable shift with the increasing prevalence of electric vehicles (EVs), and a corresponding rise in collision claims. Insurer If P&C Insurance reported paying out over €344,000 in claims related to damage to EVs in 2024, a figure that reflects a doubling of insured EVs compared to the previous year.
The average claim payout for EV damage in Latvia last year was just over €1,000. However, the largest single claim reached €19,500, stemming from a direct collision with a moose that caused significant structural damage – including to the doors, side panel, and windshield. This incident highlights the potential for higher repair costs associated with EVs, even in rural areas.
If’s data indicates that the most frequently insured EV brands in Latvia are BMW, Volkswagen, and Tesla. This aligns with broader European trends showing these manufacturers as leaders in the EV market. The age profile of insured EVs also reveals a relatively young fleet, with over 50% being two years old or less, 38% between three and five years old, 9% between six and eight years old, and 3% between nine and eleven years old. This suggests that early adopters are driving the current increase in EV insurance claims.
The nature of EV damage claims mirrors those for internal combustion engine (ICE) vehicles, with collisions with other vehicles being the most common cause. However, EVs are also susceptible to damage in parking lots and from natural events like falling trees or hail. A common issue, similar to ICE vehicles, is tire and wheel damage from potholes, particularly during the spring thaw when road conditions are less visible.
Beyond collisions, windshield damage from flying stones and debris is a frequent source of claims, particularly during spring and summer when road maintenance is underway. The cost of windshield replacement for EVs can often exceed €1,000, contributing to overall claim severity.
If’s claims experience extends beyond Latvia, with payouts also made for EV accidents in Lithuania, Estonia, Poland, Germany, and the Scandinavian countries. This broader geographic scope suggests a pan-Baltic and Northern European trend of increasing EV adoption and associated insurance claims.
The rise in EV claims is occurring against a backdrop of increasing overall vehicle insurance payouts. According to the Latvian Motor Insurers’ Bureau (LTAB), compulsory vehicle insurance payouts in Latvia totaled €73.15 million in 2024, up from €67.83 million the previous year. The average insurance indemnity also increased, to €1,693 in 2024, compared to €1,589 in 2023. While the data doesn’t isolate EV claims within this broader figure, it indicates a general upward trend in repair costs and claim frequency.
Globally, data from Mitchell International, a provider of technology and information for the Property and Casualty (P&C) claims and collision repair industries, shows a significant increase in EV collision claims. In the US, BEV claims rose by 38% in 2023. While average repair costs for EVs were slightly higher than for ICE vehicles in the US ($6,018 vs. $4,696), the difference was smaller than might be expected, and the gap is narrowing. In Canada, EV repair severity was higher, at $6,795 compared to $5,122 for ICE vehicles, with a notable 8% increase year-over-year.
The increased complexity of EVs also plays a role in repair costs. EV repairs are 50% more likely to involve operations related to sensors used in advanced driver-assistance systems (ADAS) compared to ICE vehicles. EVs often utilize lightweight materials that can impact repairability and potentially increase costs. The growing frequency of EV claims, coupled with their unique repair challenges, is likely to continue influencing the auto insurance landscape in Latvia and beyond.
The Latvian experience reflects a broader trend of increasing EV adoption and the associated challenges for the insurance industry. As EV sales continue to rise, insurers will need to adapt their underwriting practices and claims handling procedures to account for the specific risks and repair costs associated with these vehicles. The data from If P&C Insurance provides a valuable snapshot of this evolving landscape in the Baltic region.
