So you‘ve decided to go electric and buy an EV – excellent choice! As with any big ticket purchase, insurance is an important consideration for protecting your investment. And you may have heard that insuring an electric vehicle can cost more compared to a gas-powered car.
Why is that the case? This guide will break down the key factors behind the higher insurance premiums for EVs versus regular cars. You‘ll learn insider tips for minimizing these costs, as well as predictions for how the EV insurance landscape may change down the road. Let‘s dive in!
At a Glance: EV Insurance Cost Differences
Before looking at the details, here is a high-level snapshot of how insuring an electric vehicle typically differs from a gasoline-powered car:
- 10-40% higher premiums – EV insurance rates are almost always more expensive for similar models
- $400-700 per year extra – The average EV owner pays this much more annually
- Varies by model – High-end EVs like Teslas have the priciest insurance usually
So on average, you can expect to budget at least an extra $50 per month to insure your shiny new electric vehicle. The reasons why lie in the unique nature of EVs and the risks insurers associate with them.
Why Your Insurer Considers EVs a Bigger Risk
Insurance companies crunch vast amounts of data to price risk. And their number crunching has determined EVs carry 3 key areas of increased exposure compared to gas vehicles when it comes to paying claims.
1. High-Tech Components Lead to Bigger Repair Bills
The sophisticated technology that gives EVs their capabilities also makes them much more costly to repair after accidents:
- Sensors and electronics throughout the vehicle are easily damaged and expensive to replace
- Lack of modular components means entire systems often need replacing even after minor collisions
- Specialized technicians are required with expertise in high-voltage systems
According to VinPit data, EVs have 34% higher repair costs per claim on average compared to similar gas-powered vehicles.
2. Battery Replacements Greatly Add to Total Losses
The battery pack alone accounts for almost 30% of an EV‘s total value in many cases. Having to replace one can quickly lead to a total loss:
- Average cost of $7,500+ for a replacement EV battery pack
- Declared value policies mean the repair bill only has to exceed the covered amount to be declared a total loss
- Thermal runaway fires can completely destroy the battery and entire vehicle
Up to 25% of EV insurance claims end up as total losses according to industry data. That‘s 50% more often than regular cars.
3. New Technology Means More Unknowns for Insurers
EVs make up a very small percentage of vehicles on the roads today. That means limited historical data for insurers to make confident projections:
- Uncertainty over future repair costs as technology continues advancing rapidly
- Potential for new systematic issues to emerge as adoption increases
- Lack of long-term ownership data to accurately model risk
Insurers tend to be conservative with pricing new exposures until sufficient claims experience accumulates.
Big Variances: Cost to Insure by EV Model
While the average EV costs 10-40% more to insure than a comparable gas vehicle, premiums can vary dramatically depending on the specific model.
Least Expensive EVs to Insure
The cheapest electric vehicles to insure are economy models geared towards practicality over luxury features or performance:
| EV Model | Avg. Annual Premium |
|---|---|
| 2023 Nissan Leaf | $1,498 |
| 2023 Chevy Bolt EV | $1,563 |
| 2023 Kia Niro EV | $1,520 |
| 2023 Ford F-150 Lightning | $1,802 |
Most Expensive EVs to Insure
On the other end of the spectrum, high-end makes like Tesla, Porsche and Audi have the steepest insurance costs for their EV offerings:
| EV Model | Avg. Annual Premium |
|---|---|
| 2023 Audi RS e-tron GT | $4,150 |
| 2023 Tesla Model S Plaid | $4,101 |
| 2023 Porsche Taycan Turbo S | $3,897 |
Insurers consider these vehicles at greater risk for expensive damage and repair costs which leads to raised premiums.
6 Expert Tips to Save on Your EV Insurance
While basic coverage costs are out of your direct control, there are still several areas where you can take proactive steps to minimize expenses:
1. Choose your EV carefully – Opt for affordable, low-risk models to keep base rates down.
2. Shop multiple providers – Compare quotes to find the best premium for your profile.
3. Ask about discounts – Inquire about all available ways to reduce your rate.
4. Consider mileage-based plans – Pay per mile if you drive less than 10k miles/year.
5. Drop collision/comprehensive – If your EV is older, liability may suffice to cover costs.
6. Enroll in telematics program – Let an app monitor your safe driving for added discounts.
The Forecast for EV Insurance Rates
There is hope that as electric vehicles become more mainstream, insurers will gain more data to base pricing on actual risks versus perceptions. Increased competition in the EV space could also prompt carriers to offer more affordable rates to attract business.
In 5-10 years, baseline premiums for equivalent ICE and electric models may reach parity. But repairs will probably always be more technical for EVs, so some cost differential could remain.
The high-performance end of the spectrum may continue to be very expensive to insure electric or not. So making smart choices around EV models and coverage options will remain key to controlling costs.
I hope this guide has helped explain the rationale behind EV insurance pricing today. Let me know if you have any other questions!
