- Insuring an electric vehicle may differ from insuring a gas-powered vehicle.
- Electric vehicles have high value batteries and expensive electronics.
- Car buyers need to understand the nuances of EV insurance and why it might cost more.
There are some nuances in electric vehicle insurance that car buyers might want to know before committing.
Electric cars have many similarities to gasoline-powered cars, but they also have distinct differences. Currently, new electric vehicles cost more on average. They have powerful batteries. And they are more electronic than ever.
All of these factors could play a role in an electric vehicle owner’s insurance policy.
What car owners need to know about the cost of EV insurance
Drivers have a lot to weigh before going electric, such as the range of an electric vehicle, charging infrastructure, and how it fits into their lifestyle. The variables that influence their auto insurance policy are just as important, starting with the cost.
NerdWallet’s latest estimate stated that the national average cost of car insurance amounts to approximately $2,148 per year. Meanwhile, the same for electric vehicles is $2,280 per year, according to an analysis by Forbes Advisor. It could mean average annual premiums $1,830 for a Chevrolet Bolt or $4,066 for a Tesla Model S, according to financial services firm Bankrate.
So why is this? Generally, more expensive vehicles are more expensive to cover, and most electric vehicles currently have higher prices; a new one sold for $58,725 on average in January, according to Kelley Blue Book.
Their batteries are also expensive and high value. Electric vehicles may have fewer mechanical parts than an internal combustion engine vehicle, but they are packed with expensive electronics and sensors.
“These parts can be expensive,” according to insurance provider. “If the battery is damaged, certain safety protocols are often required, which increases the repair bill. Also, there are not as many workshops with trained technicians to repair electric vehicles compared to traditional vehicles .”
Supplier State Farm said a EV battery repair could be expensive between $5,000 and $15,000 and would likely require skilled and expensive labor.
While Electric Vehicle Collision and Property Damage Liability Claims tend to occur at lower frequencies than with conventional vehicles, according to the Highway Loss Data Institute, claim severity tends to be higher. But this has diminished over time.
Other savings are important to remember
This is where car buyers need to assess the total cost of ownership of an electric vehicle, according to the AAA agency. Where EV insurance and upfront costs seem more important than with a gas-powered car, drivers might see fuel and maintenance savings by going electric. They also come with lower repair and tire costs.
A AAA rating suggests owning an EV is expensive 60 cents per mile, compared to 75 cents per mile for an average SUV and 69 cents for an average sedan.
Understanding automotive pricing as a whole is unsurprisingly a priority for buyers, said Jessica Stafford, senior vice president of consumer solutions at Cox Automotive.
“That’s the biggest question consumers are asking globally,” Stafford said, “and those consumers are also asking about electric vehicles: help me understand the total cost of ownership, help me understand what it looks like and what happens when I need repairs.”