Is electric car insurance cheaper?

When you’re thinking of buying an electric car, it’s normal to have a few questions about the cost. Not all of these queries are necessarily negative but you may worry about expenses and how they compare to gas and diesel cars. One such question could be, does it cost more to insure an electric car than a traditional motor?

It’s a fair question and could be the deciding factor for a driver before making a purchase. This article will fill you in on all the info you need about electric car insurance.

What you’ll learn:

• Is insurance cheaper for electric cars?
• Why is insurance higher on electric cars?
• What does electric car insurance cover?
• What are the most expensive electric cars to insure?
• Why is insurance expensive on a Tesla?
• What is the cheapest electric car to insure?

Is insurance cheaper for electric cars?

More and more drivers are making the switch to electric cars. In 2022, fully-electric car sales reached over 800,000 in the US – nearly double the number sold in 2021. It makes sense that this should happen when gas prices are so high. In June 2022, the national average cost hit more than $5 per gallon, which was a record-breaking spike unheard of in 22 years.

If you’re among those prospective buyers, you may be wondering if electric car insurance is cheaper, too. Because although fuel is cheaper, initial costs for an EV are higher than a traditional car. After all, the technology is more state-of-the-art.  

In general, it costs around $100 more per year to insure an electric car when compared to similar models powered by gas or diesel. So, while it does cost more to insure an electric car, there are good reasons. Read on to find out why.

Why is insurance higher on electric cars?

Insurance is higher on electric cars for various reasons. Insurance companies decide their rates by looking at claims made for similar cars and using them as benchmarks. So, if your electric car model has had expensive claims in the past, it may be that rates in general will be higher.

Reasons can include:

• Batteries – EV batteries can be expensive to replace, ranging between $5,000 and $15,000.
• Replacement parts – Generally, replacement parts are 2.7% more expensive than traditional equivalents.
• Specialized training requirements – Repair shops may charge more due to the extra training they need to give their staff to work on EVs.

What does electric car insurance cover?

Electric car insurance is similar to traditional car insurance:

• Auto liability coverage – damage to other drivers, passengers, vehicles and objects.
• Comprehensive coverage – damage to your car due to events beyond your control, such as theft and vandalism.
• Collision coverage – damage caused if your car overturns or collides with an object or other vehicle.
• Uninsured/Underinsured Motorist Bodily Injury (UIM) – injuries caused to you and any passengers when hit by a driver with no insurance or insufficient coverage.
• Uninsured Motorist Property Damage (UMPD) – Similar to the above but pays for repairs to your car, or a replacement.

In addition to all this, electric car insurance may also cover damage to your EV car battery and charging equipment. But make sure to check this with your potential provider before you sign anything.

What are the most expensive electric cars to insure?

The five most expensive electric cars to insure are:

Why is insurance on a Tesla expensive? 

Tesla models rank high in the list of most expensive electric cars. There are many reasons for this.

1. Teslas can only be repaired at approved body repair shops, and the training and equipment needed to be a qualified repairer ramps up the cost.
2. The technology used in equipment on Teslas is expensive.
3. In general, Teslas often have a higher battery range than other EVs, so more driving time increases the risk of issues.

What is the cheapest electric car to insure?

The cheapest electric car to insure is the Mini Cooper SE, which costs around $1,479 annually. It’s one of the smaller EVs in general, so it makes sense you would pay less!

How can I save money on electric car insurance?

There are ways you can reduce the amount of money you pay for electric car insurance, including:

• Shop around – you might be able to save by comparing different insurance quotes from various providers.
• Avoid auto-renewal – when your current deal is nearly up, be sure to look out for a better deal and make sure you know how to leave your provider if something better comes up.
• Discount programs – providers sometimes offer great deals if you buy multiple policies from them, such as car and home insurance.
• Safe driving rewards – usage-based insurance programs provide rewards for responsible driving habits such as speed, cornering and responsible braking.
• Pay upfront – sometimes, paying a single annual instalment is cheaper than monthly payments.
• Park in a garage – keeping your EV in a garage is safer than outside, which may reduce insurance premiums.

Electric cars may cost more to insure, but some of this expense is offset with lower running costs compared to gas-powered vehicles. Shop around for good deals and you could still end up paying less than you thought.

Check out more great electric car tips

Not sure about making a purchase? Consider renting your ideal model first.