Insurers still refuse to cover some Chinese cars despite booming sales
Insurance companies seem to be struggling to keep pace with the wave of new cars coming from China, and buyers are literally paying the price
Despite Chinese cars accounting for roughly one-in-10 of all new cars registered in the UK last year, new research shows buyers may still struggle to get car insurance, with certain providers unable to offer coverage on even the best-selling models.
Part of the appeal of Chinese cars is their aggressive pricing that allows them to undercut the competition by thousands of pounds in certain cases. However, in the long run, buyers might not see the savings they were hoping for, because they face higher premiums and often fewer options for insurance, especially when compared with cars from more well established European, Korean or Japanese manufacturers.
Our sister site Carwow investigated the difficulties buyers are facing by obtaining quotes from 10 of the UK’s top insurers – Admiral, Aviva, Direct Line, Hastings, LV, AXA. Ageas, AA, esure and Allianz – for eight models. Four of the cars were from Chinese brands – the Jaecoo 7, XPeng G6, Skywell BE11 and BYD Seal U – and four were their established ‘equivalents’, including a Volkswagen Tiguan, Kia EV3, Peugeot E-3008 and Toyota RAV4.
The most stark difference in results was between the all-electric Skywell BE11 and its European competitor, the Peugeot E-3008. Only one insurer was unable to provide a quote for the French family SUV and the average of all those Carwow did receive was £838 per year. On the other hand, just one of the 10 insurers, esure, would cover the Skywell, which has been on sale here for nearly two years, and its quote was £2,203 (versus £655 for the Peugeot).
The results were similar, but not quite as dramatic, for the XPeng G6 – which like the BE11 is its maker’s first offering to UK customers – and the Kia EV3. Just five companies were able to provide quotes for the XPeng, with the highest being £1,569 from the AA, which would insure the Kia for £1,171. The average for all the quotes was £1,102 for the G6 and £827 for the EV3.
Elsewhere, on average the VW Tiguan could be insured for a little under £700, and only one insurer, Ageas, refused cover. However, with the Jaecoo 7 – one of the best-selling cars in the UK so far this year – five of the 10 insurers Carwow contacted were unable to provide insurance. Among those that did provide quotes, the average price was £858, £165 more per year than the Tiguan.
The easiest of the Chinese cars to find coverage for was the plug-in hybrid BYD Seal U, with only three insurers unable to provide quotes, and the average of those we received being £645. Its closest equivalent was the Toyota RAV4 which proved to be the most expensive to insure of the mainstream cars, with an average of £1,188 – £543 more than the BYD – and three insurers also wouldn’t cover it.
Lack of familiarity with these new makes and models coming from China, parts availability, questions around repairability and unknown reliability unsurprisingly will make some insurers cautious, as illustrated by the results of Carwow’s investigation.
For instance, LV= General Insurance, owned by Allianz, said it doesn’t provide cover for the XPeng G6, BYD Seal U, and Skywell BE11 because it’s still evaluating the insurance risks associated with these particular models.
However, this isn’t a new issue or one exclusive to Chinese cars. “It’s a problem with the UK insurance industry struggling to keep pace with a rapidly changing market,” said Carwow’s director of editorial, Iain Reid.
“Every wave of new manufacturers, from Japanese brands in the past to today’s Chinese entrants, has faced the same challenge,” he said, adding, “More new brands have entered the market in the past 18 months than in the previous 20 years combined, most of them from China. Unfamiliar specifications, higher repair costs and limited data may challenge insurers, but those pressures are being passed directly to drivers through higher prices – and that needs to change.”
Things should improve over time once these new brands from China become more settled in the UK and we learn more about the reliability and cost of repair for their cars. However, in the meantime anyone considering a newly launched model, whether or not it’s Chinese, should shop around for insurance before they buy, so as not to be caught out if it turns out insurers don’t offer coverage yet.
Reid also suggests buyers keep an eye out for manufacturer-backed insurance schemes, which can help keep costs down while insurers build confidence.
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