Police, fire and forensic authorities, as well as Mercedes-Benz Korea officials, conduct a joint forensic examination of an electric Mercedes-Benz sedan in Incheon, Aug. 8, after the car caught fire at an underground parking lot of an apartment building in the city, Aug. 1. Yonhap

Insurance companies in Korea have begun reviewing their policies regarding electric vehicles (EVs) following reports of fires caused by these vehicles.

With the rapid growth of the EV market and increasing vehicle sales, related fire accidents have also been on the rise. This is raising concerns that the existing insurance system, which is primarily focused on internal combustion engine vehicles, may not adequately reflect the unique characteristics and risks associated with EVs.

Fears surrounding EV accidents started after a spontaneous fire, which began in a parked Mercedes-Benz EV, wiped out an entire underground parking garage filled with other vehicles in an apartment complex in Incheon on Aug. 1.

Then on Aug. 16, a Tesla caught fire in Yongin, Gyeonggi Province, while the car was parked on the side of the road, further fueling the public's widespread concerns.

According to the Korea Insurance Development Institute, the number of fire and explosion incidents involving EVs has been higher than that of internal combustion engine vehicles over the past five years.

EVs had 0.93 incidents per 10,000 vehicles, while non-EVs had a lower rate of 0.90 incidents.

Moreover, the financial losses incurred in these incidents were significantly higher for EVs, with the average loss per incident tallied at 13 million won ($9,700), which is 1.9 times higher than the average of 6.9 million won for non-EVs.

Industry officials believe that adjustments to EV insurance premiums are, therefore, inevitable.

During a conference call for its earnings announcement on Aug. 14, Samsung Fire & Marine Insurance said it had received 360 claims related to the EV fire in Incheon, with the estimated damage amounting to 2.2 billion won.

“EVs generally have a higher loss ratio, resulting in insurance premiums that are approximately 1.4 times higher than those for non-EVs,” a Samsung Fire & Marine Insurance official said.

“Given the differences in accident rates across various vehicle models, we plan to optimize our portfolio.”

The comments indicate that insurance premiums for EVs could increase depending on the car model or the battery manufacturer.

Other insurers, including KB Insurance and Hyundai Marine & Fire Insurance, are also reviewing their policies for EVs.

“Due to the nature of EVs, we are aware that the average loss amount in the event of a fire accident is about twice as high compared to traditional cars. We are working to develop and improve special coverage options to meet the needs of EV owners,” an official from one of the insurance firms said.