Over the past decade, electric vehicles (EVs) have become increasingly common. However, despite higher ownership, the number of US drivers who own an EV is still very low.
The best car insurance companies insure most EV makes and models, but it’s essential to understand how EV insurance differs from traditional car insurance. In this guide, we’ll explain the key things to know about car insurance for EVs, including the cost and types of coverage.
Key Insights
- EV insurance can be more expensive due to higher repair costs and specialty coverages.
- EV owners can often benefit from insurance endorsements, like battery and charging equipment coverage and roadside assistance.
- Comparing EV insurance quotes from several insurance companies can help you find the cheapest policy.
How Car Insurance for Electric Vehicles Differs from Traditional Car Insurance
Owning an EV can have several benefits, like reduced fuel costs and tax incentives or rebates. However, EV ownership comes with unique risks and considerations, especially regarding auto insurance.
For example, EVs often require specialized repairs if you get into an accident. The replacement parts tend to be more expensive than gas-powered car components, and you probably need a trained mechanic to work on the car. These increased repair costs can drive up the cost of car insurance because the insurer has to provide a much bigger settlement if you have a claim.
Some insurance companies offer specialized EV insurance policies, which offer more tailored coverage for EV batteries and incidents that occur while charging. However, these policies can be difficult to find and may not be any cheaper than traditional car insurance.
Factors That Affect EV Insurance Costs
Several factors affect EV insurance costs, but in general, EV insurance premiums are more expensive than traditional car insurance. According to the National Association of Insurance Commissioners (NAIC), EV insurance costs $44 more on average than regular car insurance.
Here are some of the key factors that impact the cost of EV insurance:
Vehicle cost and repair expenses: EVs are built with expensive components, like lithium-ion batteries and electric motors. These parts can be costly to repair or replace, contributing to the higher insurance cost.
Battery coverage: Some insurance companies cover battery-related claims, while others don’t. If your policy covers an EV battery, it’s possible that your insurance premium could be more expensive.
Repair and maintenance challenges: EVs are more expensive than gas-powered cars and typically need to be repaired at a specialty shop with EV expertise. Due to increased labor costs, your car insurance premium might be higher.
Advanced technology and safety features: Most EVs have advanced technology and safety features, like collision avoidance systems. Insurance companies often offer discounts for insuring a car with certain safety features, which could help you save money on your EV insurance premium.
Risk of battery fires: An EV battery can catch fire and damage the vehicle or structures nearby. Insurance companies might consider this risk when calculating your premium and charge a higher premium.
Types of Coverage for Electric Vehicles
Liability insurance is a legal requirement in nearly every state. However, several other policies can be beneficial for EV owners. Here are several types of coverage you might consider if you drive an EV:
Liability insurance: Liability insurance covers third-party claims of bodily injury and property damage if you cause an accident.
Collision and comprehensive coverage: Collision insurance covers your vehicle’s repairs after an accident, and comprehensive insurance covers non-collision damage, such as hail storms, fires, break-ins, and theft.
Battery and charging equipment coverage: Some insurance companies offer battery and charging equipment coverage, which pays for damage to your EV’s battery and home charging station.
Roadside assistance for EVs: Roadside assistance covers basic roadside services if you get stuck, like battery recharging, flat tire changes, and towing.
Gap insurance: If you lease or finance your EV and it gets totaled, it covers the difference between the car’s value and your loan balance.
OEM insurance: Original Equipment Manufacturer (OEM) coverage pays to use original parts if your car needs to be repaired after a claim.
New car replacement: If your car is totaled or stolen, new car replacement insurance will pay for a new vehicle of a similar make and model to your old one.
How to Lower Car Insurance Costs for an Electric Vehicle
EV insurance premiums can be expensive. Fortunately, there are plenty of ways to reduce your rate. Some examples include:
Compare insurance providers: Look for insurers that offer specialized EV coverage and get personalized rate quotes to find the cheapest policy for your situation.
Take advantage of discounts: Look for insurance companies that offer discounts for insuring a new car, insuring a vehicle with certain safety features, driving infrequently, bundling your policies, or paying in full.
Increase deductibles: You can reduce your EV insurance premium if you choose higher deductibles for collision and comprehensive insurance policies.
Improve driving habits: Consider enrolling in a usage-based insurance (UBI) program. This program uses telematics to track your driving habits during trips and rewards safe drivers with a lower rate.
Explore government incentives: You might be able to qualify for state or federal EV incentives, which can reduce the cost of EV ownership.
Common Myths About Insuring Electric Vehicles
When it comes to insuring EVs, certain myths should be debunked. Here are a couple of common myths about EV insurance and why they aren’t necessarily true:
EV Insurance Is Always More Expensive
You might have heard that insurance for EVs is always more costly than insurance for gas-powered vehicles. While it’s often true, it’s not a guarantee.
Car insurance premiums depend on various factors besides the type of vehicle you drive, like location, age, and driving record, which often have a bigger impact on your rate.
All Insurers Provide the Same Coverage for EVs
It’s a misconception that all insurance companies provide the same coverage for EVs. In reality, some insurance providers offer specialized policies that include coverage for the specific risks that EV owners face, like battery issues.
However, you’ll likely need to research multiple providers to find one that offers unique EV coverage.
EVs Have Higher Accident Rates Than Gas-Powered Cars
Some people believe EVs have a higher rate of accidents than gas-powered cars. However, that’s not always the case. EVs undergo the same crash testing as non-EVs and must adhere to the same safety standards as other cars.
In fact, a study conducted between 2011 and 2019 found that rates of injury claims for passengers in EVs were more than 40% lower than for similar gas-powered cars.
Bottom Line
While EV insurance can be more expensive than traditional car insurance, this isn't always the case, and there are several ways to reduce your premium. Shop around and research multiple insurance companies that offer specialized EV coverage or hybrid discounts.
When comparing policies, carefully review the coverage details, particularly for key components like the battery, and don't hesitate to ask an agent about specific protections for your vehicle.
