Does It Cost More for Electric Car Insurance?

By Chantel Wakefield 05/10/2023 4:00pm

2022 Kia EV6 fast charging


Quick Tips on Electric Cars Insurance Costs

  • Higher MSRPs and repair expenses for electric cars are the primary reasons for the higher premiums.
  • Save on electric car ownership costs by taking advantage of federal and state rebates and incentives.
  • There is no special insurance required for electric vehicles, PHEVs, or hybrids.

There’s more to owning an electric vehicle than just skipping trips to the gas station. Among the many factors to consider are operating costs (which can be lower) and insurance (which can be higher).

Are Electric Cars More Expensive to Insure?

Insurance premiums for electric cars are typically higher than conventional gas-powered models. According to Insurify, the average cost of car insurance is currently $148 per month. Bankrate states that rates for the Chevy Bolt, the least expensive EV on the market, often fall below that average. Still, you can expect rates for other all-electric models to be notably higher.

As with any car insurance premium, your rate is affected by your age, location, and driving record. Keeping a clean driving record with no traffic tickets or accidents will help keep your car insurance premium low.

RELATED: Electric Cars 101: What You Need To Know About EVs

Why Do Electric Cars Cost More to Insure?

Even though they don’t run on fossil fuels or require oil changes, and they have fewer moving parts to break, electric vehicles cost more to buy than their internal-combustion counterparts. Since they tend to cost more, they cost more to insure. EVs also cost more to replace if you get into a car accident and it’s your fault, and the car gets totaled by the insurer. You may want to shop for electric vehicles in different price classes to understand what you will pay for insurance.

According to Progressive, a report says, “Generally, higher-priced vehicles cost more to insure because they also cost more to repair or replace. Today’s electric vehicles also have fewer moving parts than conventional automobiles, but those parts can be pricey. If the battery pack is damaged, certain safety protocols are often necessary, adding more to the repair bill.”

The report adds, “There aren’t as many shops with technicians trained to fix electric vehicles versus traditional vehicles. That means those qualified facilities may charge more for repairs because of the specialized training required.”

As electric vehicles become more popular, and as parts become more readily available, repair costs may begin to decrease. Mechanics will also become more familiar with the technology and be better equipped to handle common fixes. In turn, EV drivers may start to see lower insurance premiums.

Is It More Expensive To Insure a Tesla?

2023 Tesla Model X Plaid in white

According to Jason Wrather, an assistant vice president for Grange Insurance, “Two factors go into calculating insurance rates — how you drive and what you drive.” A customer driving a Tesla Model X, which starts around $100,000, will likely pay more than they would for a gas-powered vehicle in the same category.

“In that case, the customer’s insurance rate could be higher since the cost to repair that electric vehicle, if it is involved in an accident, is typically more,” he said. “But make no mistake. Most automakers are now making electric vehicles at a more affordable price point, which means that the insurance rate for an electric vehicle may not be higher.”

How To Save Money on Electric Car Insurance

If you’re looking to save money on car insurance for your electric vehicle, there are a few things you can do.

Shop Around: Compare rates from different insurance companies. Check with multiple providers to see who offers the best deal.

Raise Your Deductible: Your deductible is the amount you pay out of pocket before your insurance coverage applies. If you’re open to a higher deductible, you can often lower your monthly premiums.

Federal and State Rebates and Incentives: Many states offer EV tax credits or rebates. This can help offset the higher upfront cost. Additionally, some local utility companies offer discounts or special rates for charging electric vehicles that lower your overall cost of ownership.

Other Discounts: Some insurers offer discounts for safe driving or bundling multiple policies. Ask your insurance provider about any available discounts or incentives. You may also qualify for lower premiums depending on your employer.

MORE: Our Favorite Electric Car Safety Features and Brands That Offer Them

Is There Any Special Insurance Required for Electric Cars?

No. Electric car insurance policies look similar to those written for conventional vehicles. You need coverage for liability in case of an accident, as required by state law. You probably will want to add collision, theft, and uninsured-motorist coverage. Comprehensive insurance covers damage to your vehicle when it’s not in a crash but is rather affected by events out of your control. Examples include extreme weather, a rodent chewing interior wires, and more.

There are many levels of insurance coverage available. It’s always best to talk to your agent before you buy or lease a vehicle.

Is Special Insurance Required for Hybrid Cars?

According to State Farm Insurance, hybrid cars do not require special insurance.

A spokesperson for the insurer says, “For State Farm customers, there is no difference in insuring an electric or hybrid car compared to insuring a gasoline-powered one. We use the same underwriting guidelines.”

If I Own an EV, Will I Need Extra Homeowner’s Insurance?

If you use a Level 2 home charger in your garage, carport, or anywhere else, these use a plug similar to dryers or electric ranges. You will not need any additional coverage on your homeowner’s insurance policy.

According to State Farm, “There is no need for additional coverage because of a high-voltage charger in the home.”

However, some underwriters may require photographs or documentation that the home-charging unit has been properly and professionally installed.

MORE: How Much Does It Cost To Charge an Electric Car?

Does Owning an Electric Car Increase My Insurance Risk?

Every electric car on the market today must comply with federal safety standards. Insurance companies have not identified specific liability risks for electric vehicles. Electric vehicles that meet the National Highway Traffic Safety Administration’s (NHTSA) top 5-Star vehicle safety ratings include the 2023 Tesla Model 3 and 2023 Model Y.

As long as the electric car performs well in crash tests, liability coverage should remain competitive with similarly priced gasoline-powered vehicles.

What Else Should I Consider When Insuring an Electric Car?

Like other vehicles, when insuring an electric car, ask your insurer about savings for any safety technology on board. Many electric cars come with radar sensors, collision avoidance, and automatic braking like conventional gasoline-powered vehicles.

Insurers offer other ways to save, including accident forgiveness, multi-vehicle discounts, vehicle telematics discounts, etc.

Benefits of Driving an Electric Car

Electric car sticker prices and insurance premiums are typically higher than gasoline vehicles, but some savings come with EVs. One distinct benefit of driving an electric car is the lower maintenance costs. Electric motors have fewer moving parts, so EVs require less upkeep. This can help you save money over time. Per-mile fuel costs are also cheaper, as electricity rates are typically less than the price of gasoline.

EV drivers can take advantage of state rebates and tax incentives. These offers can help balance the higher upfront purchase costs. The federal government also offers a tax credit for qualifying EVs, which can make them more affordable for consumers.

Proponents of driving electric cars taut their positive environmental impact. Commuting in an EV produces zero emissions. With no exhaust, electric cars don’t contribute to air pollution, which is especially important in urban areas where air quality can be poor and directly impact public health.

RELATEDHow to Buy Car Insurance: Everything You Need to Know

What Is the Downside to Owning Electric Cars?

While there are many upsides to owning an electric vehicle, including no gas costs and less environmental impact, the biggest downside comes when you need it repaired. This includes vehicle crash damage.

Your insurance carrier may provide recommendations for vehicle repairs. However, consider it best to take your electric car back to the dealer.

Factory-authorized repairs are more important because of the electric car’s unique drivetrain. Beyond crash damage, a big concern is if the battery pack becomes compromised.

Because of these considerations, collision coverage on some EVs may be higher than for gas-powered cars. That’s why it’s essential to shop around for car insurance and compare rates for collision coverage before buying an electric vehicle.

Editor’s Note: This article has been updated since it was originally published.