Electric Car Chat

Hidden in the Fine Print: The Insurance Clause Every Electric Car Owner Must Know

• Graham Hill • Season 2 • Episode 8

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Insurance policies for electric cars contain hidden clauses that could cost owners thousands when battery packs need replacement after accidents. Betterment charges—the requirement for owners to contribute toward new replacement parts—are particularly concerning with EV batteries that can cost £20,000-£30,000.

• Dealership staff knowledge about EV implications remain generally poor despite government-endorsed training programs
• Betterment occurs when insurance repairs leave your car in better condition than before the accident
• Insurance companies typically refuse battery repairs, opting for full replacement due to safety concerns
• Older EVs face higher betterment charges as replacement batteries restore capacity and range
• Insurers hide betterment clauses using terms like "like kind and quality" or "pre-accident condition"
• Insurance companies currently pay £1.13 for every £1 collected, suggesting tighter claim controls ahead
• AI tools can help analyze insurance policies to identify potential betterment clauses

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Hi I’m Graham Hill and as always I’d like to welcome you to this latest podcast in a series of podcasts on insurance implications. Insurance is just one subject of over 50 out of my book Electric Cars – The Truth Revealed. These podcasts allow me to bring you the very latest of information on all the areas that will result in a successful transition from ICE cars (that’s internal combustion engine cars) to electric. 

 

There’s an amazing amount of information that consumers need before committing to an electric car. The problem is that you don’t know what you don’t know. Seems obvious but there’s much that most people don’t know about electric cars so how would you know what questions to ask? As a result, there have been calls by many people including the journalist, Quentin Willson, for the Government to embark on a journey of information to counter what is considered by them to be misinformation. This raises two questions. Are they aware that there is already an initiative in place called the EV Approved endorsement scheme, supposedly letting the public know that car dealership staff with EVA status can advise on all things electric cars. 

 

This approval is overseen and audited by The Energy Saving Trust although I struggle to understand how they can be considered to be sufficiently qualified in all the key areas such as Insurance, Finance, Emergency Situations, Driver Distractions, Driving Anxiety etc. It’s just beyond me. The endorsement was developed, with great intentions, by the National Franchised Dealer's Association (NFDA) and endorsed by the Government's Office for Low Emission Vehicles (OLEV), aimed in their words to build consumer confidence in the growing EV market by assuring buyers they’re dealing with knowledgeable professionals. Really? Sadly, after carrying out some mystery shopping exercises it was found that the knowledge levels of dealership staff was appalling. 

 

Quentin Willson and, as I love to call them, the Willson Whingers, whilst promoting themselves as experts would rather tell the Government to provide information to the public than do it themselves or maybe they aren’t as knowledgeable as they pretend to be. Or maybe they prefer to pontificate, criticize and ‘myth bust’ simply waiting for something to be mentioned in the media that they disagree with and have a whinge about it. In the meantime, I’ll just get on with the job in hand, getting information out to consumers via my book and this podcast.

 

So, back to Insurance, talking about the sort of issues that have not been discussed by either the manufacturers, the dealers or the brokers. So, these are things that you really need to know about before you even take a step down the path towards an electric car. And if you already have an electric car, some of these things are going to be pretty useful anyway, because you may be renewing your insurance and there's some pretty horrible things happening out there when it comes to insurance on electric cars. 

 

Now, in this podcast, I want to talk about something we don't actually know a tremendous amount about when it comes to electric cars. It's a word that some people have come across in the past but most people have never heard of it. It's a word called betterment. Now, betterment can be applied to either a warranty claim or an insurance claim. Let’s say you're driving your car, it's an ordinary petrol car and you've driven over something in the road and it's hit the bottom of the gearbox and cracked the gearbox case. You've immediately stopped. The car has been taken off to the garage by the breakdown service. The garage has assessed it along with the insurance company following which you’ve confirmed your insurance claim. The insurance assessor, after inspecting the car, agrees with the finding of the garage that the gearbox case is cracked and needs to be replaced. There is no other damage caused to the car or the gearbox, so the insurance company agrees to pay for the repair. And that would be quite normal and acceptable.

 

Now let's say the same happened to another car. It gets taken to the dealer, following which the dealer strips the gearbox down and finds out that because you moved further down the road, as you couldn't stop immediately, the oil had drained resulting in some cogs being ground up inside the gearbox. The insurance company points out that the car is two and a half years old and that you’ve therefore had two and a half years of use out of the gearbox and it looks as though the dealer is not going to be able to repair it. As a result, the insurer explains that the gearbox will need to be replaced with a brand-new unit. You've already had 50,000 miles use of the old gearbox. So, the insurer will expect you to contribute towards the replacement new gearbox. And this is what is called Betterment, because what they're replacing the broken gearbox with is a brand new gearbox which puts the car in a better position than the car would have been had the car not been involved in the accident. So it might be something like £8,000 for the gearbox to be replaced, but you’re expected to contribute maybe a couple of thousand pounds and that's what's known as a Betterment charge. Betterment isn’t automatic in all insurance policies so it’s always important to check this out by reading the policy. 

 

Now, if we move that across into electric cars, one of the things that we're concerned about is the battery pack. I've spoken to a couple of insurance companies and they've really been upfront in what's going to happen if, say, you damage the battery pack. Maybe driven over a lump of concrete that’s smashed into the battery pack casing causing damage. The battery comes with an eight year warranty, indicating that it's expected to last for at least eight years. But warranties don’t cover accidental damage unless the damage was the result of a mechanical fault caused by a manufacturing defect. However, this isn’t the norm, so your insurance will cover the damage to the battery pack as a result of the accident, not your warranty. 

 

The insurer may decide that you need to have the whole battery pack replaced but after 5 years of use there’s a question of betterment as the battery pack replacement will put the condition of the battery back to brand new. They may go one step further and replace the old battery with a new, higher capacity pack, capable of a greater range than the lower range of the old pack. So, will the insurer expect you to pay betterment, not just because the replacement pack is newer but also has a greater range than the old battery? Bear in mind that some of these battery packs can be £20 - £30,000. The cost of batteries will come down over time but you need to know if betterment applies to your insurance policy and in particular to the battery pack, the most expensive part of the car and potentially the most vulnerable. Even though the casing is made of either high strength steel or high strength aluminium. Not as some have suggested, armour plating which would add a massive amount to the weight of the car. The casing must be strong and light whilst also meeting minimum standards. 

This potential betterment cost is particularly important if you’ve bought the car as 2nd hand at say 5 years old. You know you have fully comprehensive insurance but if the battery needs to be replaced, following an accident, are you likely to be charged betterment? Have you checked to see if there is a betterment clause in the policy? And if you haven't checked, you need to check, because there's a good chance that you could be facing part of the cost of the replacement battery. 

This is especially the case if the accident was considered to be your fault. There’s an argument that damaged battery packs should be repaired and if that’s the case it’s unlikely that betterment will be charged. However, insurance companies are currently refusing to have the batteries repaired for fear of future failures or even fires as it isn’t fully known how other cells react following the replacement of any damaged cells. 

Even if the cells were not damaged, just the casing was cracked and the surrounding fluid in the battery pack had drained. The obvious solution would be to replace the case and simply replace the fluid that keeps the cells at an even temperature but most insurers still see this as too risky and will still seek to replace the battery pack. Raising again the question of betterment. 

 

I’ve asked several insurers and brokers about this without a clear answer. They simply explain that they’ll assess each case as it happens and on its merits. So, this is something you need to take into account when taking out your electric car insurance, have a look at the policy and see what it says about the battery. It's moving sands at the moment, so, as new policies are coming out and the cost of battery replacement remains high, they may consider full replacement of damaged batteries and include a betterment clause or, given the cost of battery replacements on used cars they may simply write the car off as the cheaper option without a betterment charge. You really need to check the policy.

But don’t just scan the policy for the word ‘Betterment’ as some insurers hide it away in some clever wording. Instead of explicitly using the word ‘Betterment’, the insurer can use vague language to limit the payout if a repair or replacement improves the vehicle beyond its pre-damaged state.

Some examples are:

"Like-kind and quality": Policies often state that replacement parts will be of "like-kind and quality". For an electric vehicle, this can be an issue if a damaged battery is old or obsolete and the only available replacement is a newer, more efficient model. The insurer may use this phrase to justify paying only the depreciated value of the old battery, forcing the policyholder to cover the difference for the new one.

Next is "Fair and reasonable cost of repair": An insurer may agree to pay only the "fair and reasonable" cost of repairs. They can interpret this to mean the cost of replacing worn parts, such as an aging battery, with parts of equal age and condition, not brand-new replacements that improve the car's overall value.

Another expression is "Repairs to return the vehicle to its pre-accident condition": This wording frames the insurer's obligation as strictly restoring the car to its state before the damage occurred, not to a better or newer condition. If a repair inherently involves replacing old parts with new ones, this clause allows the insurer to impose a betterment charge.

Finally, they refer to Leased battery exclusions: Some policies for electric vehicles with leased batteries may have specific clauses or wording related to battery failure or damage. The terms can be complex and may require the policyholder to deal with both the car insurer and the battery lease provider, potentially involving hidden costs or coverage limitations.

So given the alternative wording, extra care should be taken when deciding who you will use for your electric car insurance. The problem is that with so much alternative wording and complicated interpretations it’s difficult for the general public to fully understand the implications and potential cost if they’re to make a claim. Whilst I personally don’t think this will be a major problem the latest information from the Association of British Insurers shows that members are paying out £1.13 for every £1 collected. So this suggests either increased premiums or tighter control over claims with betterment being a possible solution

 

Betterment is something the Insurance industry needs to get a grip of and build in consistency with no surprise betterment charges following an accident. For the moment all I can do is forewarn you and advise you to check your policy for any betterment clauses and what happens following an accident along with the treatment of damaged batteries or damaged battery casing. 

 

The same rules have always applied to petrol and diesel cars but not always enforced if a major component is replaced with a new part such as engine or gearbox but for the moment I'm concentrating on electric cars, because this is a worry of mine that we might find ourselves in a situation where you damage the battery pack, they replace it and then expect substantial betterment charges from you. 

 

The same will apply to warranty claims, but we'll cover that separately. We're just concentrating on insurance at the moment. We'll cover off warranty in another podcast. The latest news on batteries and battery repairs is improving all the time. As we learn more about the effects of changing cells within the battery packs and whether the new cells compromise the old cells and with a steady growth of battery repairers this will eventually change. 

 

All I would suggest is be very careful that you understand the terms and conditions of the insurance policy. Don’t take anything for granted because electric cars are so vastly different to petrol and diesel cars. 

 

There is one final word on AI. Claud.AI, my AI platform of choice, along with others such as ChatGPT, are now able to check contracts for key terms with simple explanations. If you have any specific queries, AI will be able to check the policy for you and even create an email to send to your insurer if clarity is required. So you would be able to ask if there are any betterment or similar clauses in the contract and will damaged parts always be replaced with new parts without extra charges other than the applicable excess charge.

 

Okay, that's another podcast done. Before I go a short mention of my book and training. I'm the author of Electric Cars - The Truth Revealed, and if you want to order a copy of that book which is where all of this information will be included as well as the associated training course. If you visit grahamhilltraining.com, you can buy a pre-updated copy of the book. It's a downloadable book because we're saving the planet. 

 

So you can download the book immediately albeit that it’s going through a major re-write so buy the current book and we’ll send you the updated version free of charge in 2026. If you book and pay for the training when it comes out in 2026, you'll receive huge savings. We'll be charging hundreds of pounds for the training when it’s released as a stand-alone product. You'll get it as an add-on for just a few pounds if you do it now. 

 

That’s me done. I've been Graham Hill still causing a ruckus. Thanks for joining me, catch you on the next one. Bye for now.