You save fuel, but spend more on insurance.
With gas prices ever increasing and all the affordable electric cars coming in 2023, many consumers are considering an electric vehicle. And while your electric car saves you at the pump and requires less maintenance, EV insurance costs more.
While this is no longer a problem, EV insurance is indeed more expensive than your gas guzzler. Even the same car model costs more if it is an electric vehicle or a plug-in hybrid. So when calculating your expenses and finances, don’t forget to consider EV insurance coverage.
Here’s what you need to know about electric car insurance and how you might be able to lower your premium.
Why is electric car insurance more expensive?
While several factors go into the cost of auto insurance, you’ll spend more each month if the car is electrified. These factors include driving history, violations, accidents, damage history, age, driving experience, place of residence and vehicle cost.
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 the expensive and specialized technology features.
For example, auto insurance providers know that an EV will likely cost more to repair or replace than a traditional model. Additionally, many collision centers are not qualified to repair EVs, and you may need to send that Tesla to a specialty store or Tesla-certified center.
Depending on which model you buy, you may have to go to a specialty shop, which usually charges more labor per hour. These extra costs hit your wallet, not the insurance company.
What you can expect to pay
Note that your auto insurance mileage may vary. Every person, location, model and provider is different.
According to a June 2022 report by Get Jerry, electric car owners can expect to pay about $56 more per month to insure their vehicles. That’s over $650 in additional insurance premiums per year. At first glance, that’s quite a difference, but some other reports suggest smaller price discrepancies. However, EV owners will spend more to insure a car.
Again, insurance prices and premiums vary by state, but by bank rate, the average cost of auto insurance in the US is around $1,770 per year for full coverage. However, that number quickly climbs to over $2,200 per year (on average) if you’re insuring an electric car. That’s still north of $40 more per month.
Owning a Toyota Prius or a plug-in hybrid electric vehicle costs slightly less insurance than a pure electric vehicle. Or, for example, a $45,000 electric vehicle 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 coverage only marginally more expensive.
It’s worth noting, however, that you could get tax incentives for this electric vehicle, not to mention you’ll quickly make up the insurance difference in fuel and maintenance savings. Also, it should go without saying, but shop around, check with different providers and find the best possible deal.
Can I reduce EV insurance costs?
Insurance companies use all kinds of criteria and coverage when determining your premium and how much you will pay. Things like collision, comprehensive and uninsured motorist coverage can and will vary by company. In addition, consumers can also choose their level of protection for specific situations.
And while I wouldn’t recommend going the lowest insurance tier to save money, there are ways to reduce EV insurance costs. For one, you want to get quotes from multiple insurance companies and compare what each offers. Many of the cheapest providers offer lower payouts for medical or uninsured drivers, so keep that in mind as well.
Look for providers that offer the best overall package, roadside assistance, rental protection and the like. Rewards can vary widely for the same electric vehicle as each company has its own tiers.
But even if you’ve decided on an insurance provider, you might still be able to save money. You could increase your deductible and lower your premium, but you’ll pay more out of pocket if you have an accident.
You can opt for an insurance provider that offers discounts when you install an insurance tracking device or app. For example, Tesla has its own car insurance in select states that rewards safe driving, and you can quickly take out or adjust the policy with their app.
Some insurance companies also offer usage-based discounts. Depending on how little you drive, you can save a significant amount on your monthly insurance policy.
Finally, don’t forget things like bundling home and auto insurance, good student discounts for college kids, and other discounts. Finally, if you can pay in full for a six- or 12-month policy instead of monthly, that could help offset the EV increase.
Finally, with the rapid increase in electric vehicles entering the market, tariffs are becoming extremely competitive. As a result, we are beginning to see insurance premiums for electric cars slowly coming down to similar prices as regular vehicles in some cases.
So your insurance could potentially 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.