Insuring an electric vehicle (EV) can cost more than insuring a gas-powered car, mainly due to:
Higher sticker prices - EVs have larger MSRPs than gas cars
Specialized repairs - EVs need EV-certified repair shops and mechanics
This means insurance companies may have to pay more for:
Collision coverage - To fix/replace a damaged EV
Comprehensive coverage - If an EV is stolen
Rental reimbursement - To pay for a rental while an EV is being repaired
Types of auto insurance coverage
There are several main types of auto insurance coverage to consider when insuring an electric vehicle:
Liability Coverage
This covers bodily injury and property damage that you cause to others in an accident when you are at fault. There are two main components:
Bodily injury liability - Pays for medical expenses and lost wages for injured parties
Property damage liability - Covers damage you cause to another vehicle or property
Liability coverage does not pay for any damage to your own vehicle or injuries to you or your passengers.
Collision Coverage
This pays for damage to your own vehicle after an accident, regardless of fault. For example, if your EV is totaled after being hit by another driver, collision coverage would pay for the cost to replace your EV.
Deductibles apply, meaning you pay a set amount out of pocket before coverage kicks in. Higher deductibles equal lower premiums.
Comprehensive Coverage
This covers non-collision damage to your EV, including:
Theft
Vandalism
Weather events like hail or floods
Collisions with animals
Like collision, comprehensive coverage has a deductible. Many lenders require comprehensive and collision coverage to finance a vehicle purchase.
Uninsured Motorist Coverage
Uninsured motorist coverage pays for injuries and vehicle damage caused by a driver with no insurance who is at fault. There are two types:
Uninsured motorist bodily injury - For medical expenses
Uninsured motorist property damage - For vehicle repairs
This protects you in hit-and-run scenarios or accidents with uninsured drivers.
Additional Coverages
Other add-ons may include:
Rental reimbursement - For rental car costs while your EV is being repaired
Roadside assistance - For towing and labor if your EV breaks down
Gap insurance - Covers the difference between what your EV is worth and what you owe if it's totaled
Choosing the right coverage levels involves balancing premium costs with your risk tolerance. Higher limits mean better protection.
Factors affecting electric vehicle insurance costs
When shopping for EV insurance, premium costs can vary widely between providers. Here are some key factors that affect how much you'll pay:
Vehicle MSRP
Insurers set rates partly based on the value of the vehicle being insured. Since EVs have higher sticker prices than gas cars, this drives up premiums. For example:
Vehicle |
MSRP |
|---|---|
Nissan Leaf |
$27,400 |
Tesla Model 3 |
$46,990 |
A Model 3 may cost almost 2x more to insure than a Leaf due to the $20K+ difference in MSRP.
Repair Costs
Specialized repairs for EVs cost more than gas car repairs. Some factors leading to higher repair bills:
Limited availability of EV mechanics and body shops
High cost of replacement EV batteries - up to $20,000
Potential delays getting necessary parts
Since insurers foot the bill for repairs, higher costs get passed on through higher premiums.
Availability of Discounts
Discounts can substantially reduce EV insurance costs. However, discounts like:
Good driver
Good student
Multi-policy
Anti-theft devices
May not apply to EVs. Shop around for companies offering EV-specific discounts when possible.
Driving History
Your personal driving record plays a big role in determining your rates. A clean record with no accidents, speeding tickets, DUIs, etc. will result in lower premiums.
State Minimums
Most states require drivers to carry at least a minimum amount of liability coverage. However, state minimums may not provide sufficient protection. Carrying more than the minimums will increase costs but reduce financial risk.
Understanding these key factors can help drivers anticipate costs and make informed insurance decisions when buying an EV.
Ways to save on electric vehicle insurance
While insuring an EV is likely to be more expensive than a gas vehicle, here are some tips to potentially lower your premiums:
Shop Around for Quotes
Rates can vary significantly from insurer to insurer. Comparing quotes from multiple companies is the best way to find the lowest price.
Get quotes from national carriers like Geico, Progressive, etc.
Check quotes with regional providers in your area
Use independent agents/brokers to compare many insurers
Shopping around annually can catch any better rates as companies adjust pricing.
Ask About Discounts
Different insurers offer their own mix of discounts. Ask representatives what discounts they offer for EVs specifically. Some options to ask about:
Low mileage
EV safety features
Telematics programs
Bundling with home insurance
Taking advantage of multiple discounts can lead to substantial savings.
Raise Your Deductible
Deductibles represent what you pay out of pocket before insurance coverage kicks in after an accident.
Deductible |
Premium Reduction |
|---|---|
$500 |
0% |
$1,000 |
10-20% |
$2,500 |
25-45% |
Raising your deductible to $1,000 or $2,500 can potentially slice your premiums substantially. Just be prepared to pay more upfront if you ever need to file a claim.
Consider Pay-Per-Mile Insurance
With pay-per-mile insurance, you pay a base rate plus a per-mile rate based on how much you drive. This can be cost-effective for low-mileage drivers. However, high-mileage drivers may pay more overall.
Pay-per-mile insurance offers another way EV drivers can potentially save compared to traditional policies. Not all insurers offer this option though.
Taking a multi-pronged approach of combining these tips can help drivers find the most affordable EV coverage.
Where to purchase electric vehicle insurance
You have several options when it comes to purchasing auto insurance for your electric vehicle:
Major Insurance Companies
Most large national insurers like Geico, Allstate, and State Farm offer EV insurance policies. You can:
Get quotes directly through their website
Call to speak with an agent
Visit a local agent office if available
The major insurance companies have competitive rates and offer all standard types of auto insurance coverage.
Regional and Local Insurers
Beyond the big national brands, check rates from insurers focused on your state or region. These companies may offer:
Competitive pricing
Discounts for being a local customer
High level of service from local agents
Some top regional auto insurers include:
Erie Insurance
Auto-Owners Insurance
Liberty Mutual
Independent Insurance Agents
Independent agents represent multiple insurers. They can compare quotes across multiple companies to find you the best deal. Working with an independent agent allows you to:
Get quotes from several insurers at once
Identify any EV-specific discounts you qualify for
Avoid doing all the legwork of contacting companies yourself
Independent agents have expertise navigating the auto insurance market.
Tesla Insurance
If you own a Tesla vehicle, check rates from Tesla Insurance. They leverage real-time driving data from Tesla cars to price policies based on your driving safety habits. However, Tesla Insurance is not yet available nationwide.
No matter what route you choose, give yourself time to compare multiple quotes and weigh all policy options to find the optimal EV insurance solution.
Benefits of electric vehicles
Beyond potential insurance savings, there are a number of benefits drivers may enjoy by switching to an EV:
Reduce Environmental Impact
A major advantage of choosing an electric vehicle is reducing your carbon footprint. EVs produce zero tailpipe emissions. This benefits the environment since:
Gas cars emit greenhouse gases like carbon dioxide
EVs eliminate these harmful exhaust emissions
Charging an EV mostly relies on electricity from renewable sources
While EVs aren't fully zero-emission, they significantly reduce the impact of driving on climate change.
Lower Maintenance Costs
EVs require less routine maintenance than gas-powered cars. With an EV, you'll avoid expenses like:
Oil changes
Air filter replacements
Engine belt/hose replacements
Tune-ups
Without a high-maintenance internal combustion engine, owning an EV can save you money on upkeep costs.
Potential Fuel Savings
It's almost always cheaper to "fuel up" an EV by charging it than paying for gasoline. For example:
Fuel Type |
Cost Per Gallon Equivalent |
|---|---|
Gasoline |
$3.50/gallon |
Electricity |
$1.20/gallon |
With gas prices fluctuating wildly, electricity offers more stable and predictable refueling costs for your EV.
Government Incentives
Purchasing an electric vehicle may qualify you for:
Federal tax credits up to $7,500
State/local rebates up to $4,000 in some areas
These incentives can help offset the higher sticker prices of EVs.
The long-term cost-savings and environmentally friendly benefits make EVs an appealing choice over gas-powered alternatives for many drivers.
Additional electric vehicle incentives
Beyond finding affordable insurance, there are government incentives that can help lower the overall cost of EV ownership:
Federal Tax Credits
A federal income tax credit up to $7,500 is available for purchasing certain makes and models of electric vehicles. Details:
The credit amount varies based on the vehicle's battery capacity
Credits phase out once an automaker sells over 200,000 EVs
You must owe at least as much in federal tax as the credit amount
Currently, buyers can still get the full $7,500 credit for:
Audi
BMW
Hyundai
Kia
Volvo
Ford (some models)
The credit lowers your tax bill dollar-for-dollar. So a $7,500 credit would reduce your federal tax liability by $7,500 when you file.
State and Local Rebates
Some states, cities, and utilities offer cash rebates and other perks for buying an EV, such as:
California - up to $4,500 cash back
New York - $2,000 rebate
Colorado - $2,500 tax credit
Additional perks may include reduced registration fees, EV charging credits, HOV lane access, etc.
Research programs in your area before purchasing an EV to identify any incentives or rebates you can leverage.
Combining tax credits and local rebates with insurance savings makes EVs even more affordable. Just be sure to consult your tax advisor to understand how credits will impact your tax return.
FAQs
Below are answers to some frequently asked questions about insuring electric vehicles:
Why is insurance more expensive for electric cars?
There are a few key reasons EV insurance costs more:
Higher sticker prices - EVs have larger MSRPs which increases replacement cost
Specialized repairs - EVs often need special parts/shops making repairs pricier
Limited discounts - Insurers offer fewer discounts for EVs compared to gas cars
Since repairs and replacement are more expensive for EVs, insurers charge higher premiums to cover potential claims.
Where can I get insurance for my electric vehicle?
You have several options for purchasing EV insurance:
Major national insurers like Geico, Allstate, etc.
Regional and local insurance companies
Independent insurance agents/brokers
Tesla Insurance - for Tesla vehicles only
Most major insurers treat EVs the same as gas cars when selling standard policies. But shop around for any EV discounts available.
Will insurance cover electric car batteries?
Yes, your auto policy will cover your EV battery, but the specifics depend on your coverage:
Collision coverage pays if your battery is damaged in an accident
Comprehensive coverage pays if your battery is stolen, vandalized, etc.
Warranties may provide some battery coverage for defects/failures
Any damage not due to a covered peril would not be covered, like gradual battery degradation over time.
Are EVs cheaper to maintain and insure long term?
Over the life of the vehicle, EVs generally have:
Lower maintenance costs without oil changes, tune-ups, etc.
Lower "fuel" costs charging on electricity vs. gas
However, insurance costs tend to remain higher for EVs than gas cars. The long-term maintenance savings help offset the higher insurance premiums.
Understanding common EV questions helps drivers make informed insurance decisions. Be sure to discuss your specific EV situation with insurance agents to get the right protection.
Conclusion
In summary, insuring an electric vehicle differs in some key ways from insuring a traditional gas-powered car:
Premiums are typically higher - Due to increased replacement costs and repair expenses
There are fewer discounts available - So take advantage of any you qualify for
Shop around to find the best rates - Quotes can vary widely between insurers
However, EVs provide many benefits that may outweigh the insurance drawbacks:
Lower environmental impact with zero tailpipe emissions
Reduce gasoline expenses by powering your car with electricity
Lower maintenance costs without oil changes, belt replacements, etc.
Government incentives like tax credits and local rebates
Tips for finding affordable EV insurance:
Compare quotes from at least 3 insurers
Ask about all available discounts
Raise your deductible to reduce premiums
Consider pay-per-mile insurance if you drive fewer miles
Finding the right auto insurance coverage is important for protecting your electric vehicle investment. We recommend:
Purchasing more than just basic state minimum liability limits
Adding comprehensive and collision if financing your EV
Understanding exclusions like battery degradation before choosing a policy
With the right insurance provider, you can find an affordable premium that fits your budget while giving you robust protection. Reach out today to discuss your specific EV insurance needs. We're here to provide personalized solutions to this rapidly growing segment of drivers.
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