Is Electric Car Insurance Cheaper?

Motorists are switching to EVs because they are environmentally friendly in terms of fuel.

Although buying electric cars has several benefits, you might want to consider a few things. For one, insurance premiums for electric cars are a bit higher than for gasoline-powered cars.

But if you do your homework, you might find a policy for cheap. So is electric car insurance cheaper? Let’s take a deep dive into the details.

The Cost of Insuring an Electric Car

A cursory look at the data reveals that insurance costs for EVs are 25% higher.

For perspective, the cheapest policy for EVs starts at $1,700 per-year for full coverage. The annual cost of insurance can shoot up to $5,000.

The Toyota RAV 4  was the cheapest car to insure at around $1800. By contrast, the most expensive car to insure was the Porsche Taycan. Tesla Models Y and 3 hover around the $3,200 mark. Full insurance coverage for the Hyundai Kona starts at $2,100 per year.

The table below shows a range of insurance prices for popular EVs.

Model	Insurance Cost in $
Toyota RAV 4 (EV)	1800
Ford Fusion (EV)	2000
Honda Accord EV	1900
Subaru Crosstrek (EV)	1900
Tesla Model Y	3200
Tesla Model 3	3200
Nissan Leaf	2300

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Why is Insurance for a Gasoline-Powered Car Cheaper?

Insurance providers operate on the principle of managing risk. The greater their risk, the higher the insurance premiums you have to pay.

Insurers study a product’s risk profile by accumulating as much data as possible. This provides them with a bird’s eye view of their potential losses and profits.

Gasoline-powered cars have been around for decades. This means that insurance providers have access to a treasure trove of data. They know the ins and outs of handling claims, car repairs, risk profiles, and more. Because of the lower risk, insurers charge lower rates for covering gasoline-powered cars.

High insurance premiums are a characteristic trait of nascent markets that are still evolving. Take the insurance cost of hybrid cars for instance. Insurance premiums for hybrid cars have become cheaper as more data has been made available.

With that said, insurance premiums for hybrids are comparatively higher than gasoline-powered cars. This is because hybrids are more expensive to buy and repair.

Moreover, data shows that hybrids may be more likely to be involved in crashes. This is because they are incredibly silent even at high speeds. It is not easy to detect hybrid cars when they are at low speeds. The same applies to electric cars.

Regulatory bodies provisioned car makers to install new safety technology to alert pedestrians. Safety features such as collision avoidance mean that pedestrian accidents are no longer a concern.

EVs are gravitating toward more safety technology, we can expect insurance prices to become cheaper.

Read Is It Worth It to Buy an Electric Car?

Why Does it Cost More to Insure Electric Vehicles?

A major reason why electric cars are expensive to insure is because of their batteries.

EV batteries are very expensive to produce. This is because manufacturers still haven’t realized economies of scale. Moreover, the global supply chain for lithium is shoddy at best. Although the price of EV batteries has become cheaper, they are still prohibitively expensive.

In fact, the cost of replacing an electric car battery hovers around $10,000. Depending on the manufacturer, the price could go up to $20,000. Worse still is the fact that EV batteries are incredibly heavy at nearly 450kg+.

Batteries with a capacity of 200 kWh tend to cost nearly a ton. The recently announced Tesla Semi with a 600 kWh battery will weigh a whopping 3500kg.

All this sophistry represents an enormous risk to insurers who will charge a hefty premium.

Electric cars, as a whole, are more expensive to repair. Their parts are not easy to find either. It can take weeks or even months for replacement parts to arrive. It also goes without saying that you need to hire trained professionals for making repairs.

The specialized training may require hundreds of hours and investment. Most car makers require certified repair shops to buy expensive tools for making repairs. All these factors will drive up the cost of repair. This, in turn, will push the prices of insurance premiums for EVs.

Electric cars are more likely to be considered totaled because their parts are rare. They need skilled technicians, more time to repair, and expensive parts.

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Factors that Affect Electric Car Insurance Premium

The biggest factors that affect your insurance rates are your age and the car itself. State coverage requirements can influence monthly premiums. If your state requires you to get more coverage, the more you’ll have to pay. Teenagers often pay more in premiums.

Here are common factors that affect electric car insurance rates:

• Your driving history
• Traffic violations
• Accidents
• Your claims history
• Total number of years behind the wheels
• Your state and zipcode
• The total coverage you chose
• Age
• Car make and model
• Credit history

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Insurance Providers that Cover Electric Cars

Most auto insurers are beginning to introduce coverage for electric cars. Popular names include the usual suspects such as AIG, Farmers, Mercury, Travelers, and Arbella. Some insurers may offer discounts for electric cars.

Discounts are offered on a case to case basis and depend on many factors.

Travelers

Travelers is a top provider of insurance for electric cars. It costs nearly $150 per month (or less). This totals to around $1800 per year. This is still cheaper than the competition.

Electric car drivers can qualify for discounts if they buy a Travelers offer. Other ways of saving include:

• Paying through online to make.
• Not having an accident or ticket in the past three years.
• Completing a driver training course.
• Being a homeowner.
• Requesting a quote before the expiration of their existing policy.    

EV owners can also add coverage for roadside assistance, new car replacement, and gap coverage.

MAPFRE

MAPFRE is reputed to be an affordable insurance provider for electric cars. Insurance costs for electric cars start at $110 per month, which is cheaper than most. You can buy EV insurance online or through their agent.

MAPFRE offers several options for discounts that can bring prices down considerably. It offers extensive coverage so you can have most of your policies with one insurer. Overall, MAPFRE is a great choice and worth considering.

American Association of Retired Persons – (AARP)

AARP is a top-rated auto insurance provider that extends coverage to electric cars. It provides special discounts to AARP members and has excellent ratings from various platforms. The only problem is that applicants must be 50 or above.

The average monthly cost for a policy starts at $112. This is relatively affordable compared to other insurance providers.

Tesla Insurance

Tesla knows the woes their customers will face with insurance companies. This is why they decided to launch their own insurance products under Tesla Insurance.

At the time of writing, Tesla provides insurance policies in select states. These include California, Illinois, Texas, Arizona, and Ohio. Supported cars include Model X, Model Y, Roadster Tesla, and Model 3.

Tesla has further plans to roll out insurance coverage throughout the country. Moreover, Tesla has the same quality of coverage as other car insurance providers. Coverage includes property damage, collision, and bodily injury.

The carmaker also sells their comprehensive Autonomous Vehicle Protection Package. This package is useful for owners of Tesla vehicles that can drive autonomously. The coverage includes autonomous vehicle owner liability, electronic key replacement, and wall charger coverage.

Stevens Institute of Technology found the EV insurance market to be potentially worth $8 billion. This means it won’t be long before insurance providers offer competitive rates to motorists.

Tesla owners can request an online quote by visiting the official website. The insurance offering is based on telematics data. This means it can offer low premiums to drivers with safer driving habits.

However, Tesla has specified that monthly premiums are tied to a driver’s Safety Score. A low Safety Score will coincide with higher premiums.

Tesla Insurance provides discounts for purchasing several policies. The carmaker can provide rates that are up to 30% cheaper than its competitors. However, like most insurance providers, every driver will be subjected to different rates. The final rate depends on a number of factors.

Some Tesla owners may qualify for lower rates with Tesla Insurance. However, others may have to pay more depending on factors such as their driving history. Tesla’s discount offers are based on real-time driver behavior. This provides drivers with an incentive to drive safely.

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Some Insurance Providers do not Cover Electric Cars

Many top insurance providers, such as Allstate and MAPFRE, offer policies for EVs. However, some insurance providers do not cover electric cars.

It is illegal to drive cars without insurance. You should at least have a minimum level of insurance coverage required by the state. Driving without insurance could be a major problem for you.

Are you having trouble finding an insurer in your area? Make sure to consider the listed companies, especially Tesla Insurance if you’re in supported states.

Remember, every insurer will have their own unique formula to determine how much you’ll pay. As always, make sure to do your research. Get as many quotes from providers as possible before you purchase a policy.

Read Should I Buy an Electric Car Now or Wait?

How to Find Electric Car Insurance for Cheap

Here are a few tips to help you save on your EV insurance.

Do Your Research

The best way to find cheap electric car insurance is to compare quotes from insurers. Take your time and don’t rush the process. This will take a while but it could potentially save you hundreds per month.

Bundle Insurance Policies and Extending Coverage

You can qualify for discounts by purchasing multiple policies from the same insurer. You can get discounts with a good safety record and by bundling home insurance.

Try Pay-per-mile Insurance

Pay-per-mile insurance allows you to pay for coverage based on the number of miles driven. It may not be suitable for you if you drive a lot. This policy is best suited to motorists who don’t drive a lot.

Note that pay per mile insurance is different from low mileage discounts offered by insurers.

Drive Safely

If you have a record of driving safely, you may qualify for lower premiums. Your insurance provider will reward you for safe driving behaviors. Make sure to improve driving habits such as cornering, braking, and phone use.

Add More Safety Features

Insurance companies may offer lower premiums to electric cars that have more safety features. Some of the most common safety features that could get you a discount include:

• Anti-theft devices
• GPS tracking devices
• Adaptive lights
• Motion sensing mirrors and bumpers
• Lane departure warnings
• Anti skid technology
• Electronic stability control      
• Anti-lock brakes

File Claims Carefully

Filing claims can make car insurance more expensive. Just about every insurer will raise your rates significantly after you file a claim. This also includes Tesla Insurance. Moreover, some insurers continue to charge higher for claims that are up to 3-years-old.

Look for Tax Credits

You may be eligible for tax incentives at both the federal and state level. This depends on where you live and the make and model of your electric car. Make sure to check the Energy Department’s official website to see if you are eligible.

Some electric cars are eligible for up to $7500 in tax credit. Eligible cars include

• Hyundai: Ioniq 5
• Jaguar: I-Pace
• Rivian R1T
• Volkswagen: ID.4
• BMW:i4
• Audi: E-Tron
• Genesis: GV60
• Kia Niro EV
• Mercedes-Benz: EQA

Wondering why Teslas are not eligible for the federal tax credit? This is because the tax credit expires once a manufacturer sells its 200,000th car. Tesla has sold close to 2 million cars to date. Other cars that are no longer eligible include Chevrolet Bolt EV and the Bolt EUV.

These are some of the most efficient ways of lowering your insurance rates. As a long-term solution, you can improve your credit score and driving record.

Wrapping Up

So there you have it, a quick look at the electric car insurance market. Give it a few years and insurance providers will offer more competitive rates. In most cases, electric car insurance is more expensive than gasoline-powered cars. For the best possible insurance rates, make sure to ask your agent for discount programs.

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