Insurance for Electric Cars
One of the main reasons to choose an electric car over a gasoline-powered car is that they offer a lower cost of ownership. While the initial purchase price of an EV may be higher, it’s usually offset over time by lower maintenance costs, and especially if you charge at home, substantially lower fueling costs. The more you drive in a given year, the more you could save on gasoline by switching to electric. But, according to data from Consumer Reports and The Zebra, an insurance-comparison website, electric vehicles still cost more to insure than conventional vehicles.
Though there are some exceptions, both mainstream and high-end electric cars still cost more to insure than roughly equivalent gasoline or even hybrid cars, for a number of reasons.
First, insurance companies don’t have as much risk assessment data for EVs as they do for other vehicles, which have been on the market for many more decades. With hundreds of millions of data points, and tens of millions of repairs, insurance companies know how much regular cars cost to fix. They even know repair costs for hybrids, which have been on sale for over 20 years. But for EVs, risk-averse insurers are building some uncertainty into the premiums that they charge.
Electric Car Insurance: Higher Repair Costs
What data does exist for EVs also suggests that compared to conventional cars, electric cars are more often declared a total loss after a crash. Batteries – the largest and most expensive component of most EVs – that are damaged or compromised in a crash can be worth half the total cost of the vehicle.
If an electric car can be repaired, those costs tend to be higher, as well. On average, electric vehicles spend more time being repaired than gas-powered vehicles, due to supply chain issues for electronic components, or more complicated diagnostic processes which have to be performed by specially-trained technicians.
How much does electric car insurance cost? It depends on the class of vehicle you’re looking at. For less-expensive vehicles, the insurance gap is small. A Chevrolet Bolt EV, on average, costs $78 more per year to insure than a similarly-priced Hyundai Ioniq Hybrid. Move up to a premium sedan, and a Tesla Model 3 Long Range costs on average $470 more per year to insure than an Audi A4, which is gasoline-powered.
More-expensive vehicles tend to come with more features that extend their time in the repair shop, as parts need to be sourced and systems need to be calibrated. Still, there are some bright spots: A Nissan Leaf costs marginally less to insure per year than a Toyota Prius, for example.
Electric Car Insurance Premiums: Trending Downward
If you’re considering an electric car, the good news is that insurance premiums for EVs are trending downward. Insurance companies collect more data every year, and as more models come onto the market, premiums should continue to drop.
As more EVs hit our roads, more data can be gathered, giving insurance companies a far better idea of how risky they are to insure – and how expensive they are to repair. Over time, there will also be an increasing number of qualified technicians to repair EVs, speeding up the time they spend in the shop, and thereby reducing premiums. Manufacturers are also working on ways to make those huge EV batteries more easily repairable, so they don’t need to be thrown out, and their vehicles totaled.
The cost of electric car batteries and their replacement or repair is just one variable that defines your insurance premium. The major drivers are: where you live, how old you are, how much driving experience you have, and your credit score (in some states).
High-performance or luxury cars are more expensive to insure, regardless of how they are powered. As always, it pays to do your homework, shop around, and make sure you know all of the options, because rates can vary widely between insurers. While some electric cars may cost more to insure right now, they should, over the life of the vehicle, still cost less to operate thanks to lower fueling and maintenance costs.
