EVs

Electric Vehicles and Insurance: Costs Compared to Combustion Cars

As electric vehicles (EVs) become more popular, one major consideration for potential buyers is the cost of insurance. While EVs offer benefits such as reduced fuel and maintenance costs, they often come with higher insurance premiums compared to their combustion engine counterparts. Here’s an overview of why insurance costs for EVs tend to be higher, how they compare to traditional vehicles, and what drivers should know before making the switch.

Why Are EV Insurance Rates Higher?

The higher insurance premiums for EVs can be attributed to several factors:

  1. Higher Repair Costs: EVs often have specialized technology, such as advanced battery systems and complex electrical components, which can be costly to repair. According to AAA, repairs for an EV after an accident can be up to 50% more expensive than for a combustion engine vehicle.
  2. Limited Parts and Trained Technicians: Since EVs are still relatively new, parts can be more expensive, and fewer mechanics are trained to handle EV repairs, which drives up repair costs.
  3. Battery Replacement: In the event of severe damage to an EV, battery replacement costs are significant. A battery replacement can cost between $5,000 and $15,000, depending on the model and battery size, which increases the risk for insurers.
  4. Higher Vehicle Value: EVs generally have a higher upfront cost than comparable combustion vehicles. As a result, they often have a higher replacement value, which impacts insurance premiums.

Comparing EV Insurance Costs with Combustion Cars

To better understand how EV insurance rates compare, let’s look at some examples of popular EVs and their combustion counterparts, with data from Forbes and The Zebra.

  1. Tesla Model 3 vs. BMW 3 Series
  • Tesla Model 3: $1,730 annually on average
  • BMW 3 Series: $1,400 annually on average
  • Difference: Insurance for the Model 3 is about 24% higher.
  1. Chevrolet Bolt EV vs. Chevrolet Malibu
  • Chevrolet Bolt EV: $1,780 annually on average
  • Chevrolet Malibu: $1,500 annually on average
  • Difference: The Bolt EV insurance is roughly 19% higher than the Malibu.
  1. Ford Mustang Mach-E vs. Ford Escape
  • Ford Mustang Mach-E: $1,860 annually on average
  • Ford Escape: $1,400 annually on average
  • Difference: Insurance for the Mustang Mach-E is approximately 33% higher.
  1. Hyundai Kona EV vs. Hyundai Kona (Combustion)
  • Hyundai Kona EV: $1,720 annually on average
  • Hyundai Kona (gas-powered): $1,400 annually on average
  • Difference: The Kona EV costs about 23% more to insure.

Tips for Lowering EV Insurance Costs

There are ways for EV owners to potentially lower insurance premiums:

  • Shop Around: EV insurance rates can vary widely between providers, so it’s beneficial to compare quotes.
  • Consider Discounts: Many insurance companies offer discounts for safety features, bundling policies, or low-mileage use.
  • Look for EV-Friendly Insurers: Some insurers are beginning to offer incentives for EV owners, like Nationwide’s green discount program, which reduces premiums for eco-friendly vehicles.

Adding It Up

Electric vehicles generally come with higher insurance premiums compared to similar combustion engine vehicles, primarily due to repair costs, battery replacement, and vehicle value. While EV owners may pay more for insurance, the savings on fuel, maintenance, and potential green incentives can offset these costs. As EV technology continues to advance, insurance rates may become more competitive, making it more affordable for eco-conscious drivers to switch to electric.