Chinese cars are attractive with a low price, but every coin has two sides. As research by the British company Carwow shows, what you save on the purchase, you can easily lose in expensive insurance. Some insurance companies even completely refuse to insure Chinese models.
Photo: Jaecoo/Omoda
Insuring a Chinese car in Europe can be more expensive and difficult than you think. For now, insurance companies are very cautious and do not rush into this business. And if they do, they will pay handsomely for it.
Europe has been experiencing a boom in Chinese brands in recent years. Last year in Europe, including Great Britain, Switzerland and Norway, there were approximately 811,000 registrations on the new car market, which represents a year-on-year increase of 99% and a market share of around 6.1%. Chinese cars attract customers mainly with aggressive prices. A Chinese model can be thousands of euros cheaper than a comparable car with a European, Japanese or Korean logo. Well, not all that glitters is gold. The card is turned over during insurance. This was shown recently by a survey by the British company Carwow. It’s not just that Chinese models are vastly more expensive to insure, according to him, but some you won’t even insure.
Carwow obtained quotes for the insurance of eight cars, four of which were Chinese, from 10 leading UK companies. These were insurance companies Admiral, Aviva, Direct Line, Hastings, LV, AXA, Ageas, AA, Esure and Allianz. China was represented by the Jaecoo 7, XPeng G6, Skywell BE11 and BYD Seal U. Against them were established European, Japanese and Korean competitors including the Volkswagen Tiguan, Kia EV3, Peugeot E-3008 and Toyota RAV4. Chinese cars lost in this insurance battle, with one exception, practically across the board. Some insurance companies even refused to cover them completely.
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For example, the average insurance premium for the XPeng G6 was £1,102 (€1,267), while the Kia EV3 cost £827 (€952). The highest bid for an XPeng even reached £1,569 (€1,804) from AA. By comparison, a Volkswagen Tiguan could be insured for less than £700 (€805) on average, with only one insurer, Ageas, refusing cover. The problems were even more pronounced with the Jaecoo 7 model, one of the best-selling cars in the UK this year. Five out of ten insurance companies contacted did not provide insurance, and the average price of those who sent an offer was £858 (€986), i.e. £165 (€190) more than the Tiguan.
On the other hand, it was easiest to find insurance for the plug-in hybrid BYD Seal U. Only three insurance companies rejected the offer, while the average price of the rest was £645 (€742). BYD’s closest rival, the Toyota RAV4, even turned out to be the most expensive to insure among regular cars. The average price climbed to £1,188 (€1,366) – £543 (€624) more than the BYD. And surprisingly, three insurance companies refused to insure Toyota. In the case of Toyota, the study does not elaborate on the reasons for the higher insurance premium. However, with Chinese models, insurance companies openly talk about caution. Insurance companies are still afraid of Chinese cars.
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The reason is the lack of experience with new brands, issues of repairability, availability of spare parts and an as yet unknown level of reliability. For example, Allianz-owned LV= General Insurance said it does not provide coverage for the XPeng G6, BYD Seal U and Skywell BE11 because it is only evaluating the insurance risks associated with those specific models. “Chinese cars are a challenge for the insurance market, which is struggling to keep up with a rapidly changing market,” says Iain Reid, editorial director of Carwow. After all, more new brands entered the European market in the last 18 months than in the previous two decades combined.
The situation could improve over time when brands from China become more established in Europe, similar to what happened in the past with Japanese and later Korean automakers. In the meantime, however, according to Carwow, anyone considering a new Chinese model should compare insurance options before buying. He avoids such high costs or even the risk of simply not insuring his car and bearing all damages at his own expense. In the end, a cheap car can be significantly more expensive than it seems at first glance. And there are other aspects, for example, the rapid loss of value of Chinese cars in the “car” market.
