You save on gas, but spend more on insurance.
Between the ever-increasing gas prices and all the affordable electric cars coming in 2023, many consumers are considering an electric car. And while your electric car saves you money at the pump and requires less maintenance, an electric car costs more to insure.
Although this is slowly becoming less of a problem, electric car insurance is indeed more expensive than your gas guzzler. Even the same car model costs more if it’s an EV or PHEV. So when calculating your expenses and finances, don’t forget to factor in EV insurance coverage.
Here’s what you need to know about electric car insurance and ways to potentially lower your premium.
Why is electric car insurance more expensive?
While several factors go into the cost of someone’s car insurance, you’ll spend more each month if the car is electrified. Those factors include driving history, violations, accidents, claim history, age, driving experience, where you live, and how much the vehicle costs.
And as we all know, electric vehicles are quite expensive. Typically, more expensive cars cost more to insure because they also cost more to repair or replace. EVs generally have higher repair costs, especially if the battery gets damaged, not to mention expensive and specialized technology features.
For example, auto insurers know that it will likely cost more to repair or replace an electric vehicle than a traditional model. In addition, many crash centers are not qualified to perform repairs on electric vehicles, and you may need to send that Tesla to a specialty retailer or Tesla-certified center.
Depending on the model you buy, you may need to go to a specialty store that usually charges more per hour for labor. Those extra costs hit your wallet, not the insurance company.
What you can expect to pay
Keep in mind that your mileage may vary when it comes to car insurance. Every person, location, model and all providers are different.
According to a June 2022 report from Get JerryEV owners can pay about $56 more per month to insure their vehicles. That’s more than an additional $650 a year in insurance premiums. On the surface, that’s quite a difference, but a few other reports suggest lower price differentials. However, EV owners will spend more to insure a car.
Again, insurance prices and premiums vary by state, but according to Bank rate, the average cost of auto insurance in the US is about $1,770 per year for full coverage. However, that number quickly jumps to more than $2,200 a year (on average) when you insure an electric car. That’s still north of $40 more per month.
Owning a Toyota Prius or plug-in hybrid electric vehicle costs slightly less to insure than an all-electric vehicle. Or, for example, a $45,000 EV costs less than a $90,000 Rivian R1T electric truck for full coverage. We’ve seen expensive EVs insured for around $1,900 a year, making them only slightly more expensive to keep covered.
However, it’s worth mentioning that you can get tax breaks on that EV, not to mention you’ll quickly make up the insurance difference on fuel and maintenance savings. Plus, it should go without saying, but shop around, contact different providers and find the best deal possible.
Can I reduce EV insurance costs?
Insurance companies use all kinds of criteria and coverage when determining your premium and how much you pay. Matters such as collisions, comprehensive and uninsured motorist coverage can and will vary from company to company. In addition, consumers can also choose their level of protection for specific situations.
And while I wouldn’t recommend choosing the lowest tier of insurance to save money, there are ways to lower EV insurance costs. First, you want to get quotes from multiple insurance companies and compare what each insurer offers. Many of the cheapest providers offer lower payouts for medical or uninsured drivers, so keep an eye out for that as well.
You want to look for providers that offer the best total package, roadside assistance, rental protection and the like. Premiums can vary widely for the same EV, as each company has its own tiers.
That said, even once you’ve chosen an insurance company, there may be ways to save money. You can increase your deductible and lower your premium, but you will pay more out of pocket if you have an accident.
You can choose to go with an insurance company that offers discounts when you install an insurance tracking device or app. For example, Tesla has its own auto insurance policy in select states that rewards safe driving, and you can quickly sign up or adjust the policy using their app.
Several insurance companies also offer usage-based discounts. Depending on how little you drive, you can save a significant amount on your monthly insurance policy.
And finally, don’t forget about things like bundling home and auto insurance, great college student discounts, and other discounts. Finally, if you can pay a six- or 12-month policy in full instead of monthly, it could help offset the EV increase.
Finally, it is worth noting that with the proliferation of electric vehicles entering the market, rates are starting to become ultra-competitive. As a result, we are slowly seeing insurance premiums for electric cars falling to prices comparable to regular vehicles in some cases.
So your insurance might stay the same depending on where you live and what you drive, but don’t be surprised if it costs a little more each month. Call your provider and find out today.