Electric cars, also known as Electric vehicles (EVs) have become more popular. And while the pricing of electric cars has found a balance between affordable and competitive, insurance costs are a separate consideration.
While electric cars used to be much costlier to insure compared to their gas-powered counterparts, the gap has recently narrowed. Their popularity has surged over the past several years, and seeing an electric vehicle on the road is no longer a rarity. If you’re thinking of making the switch yourself, this article breaks down what you should keep in mind when shopping for insurance.
Benefits of driving an electric vehicle
Whether owning an electric vehicle is the right choice for you will depend on your personal circumstances. Here are six benefits of driving one you can consider:
Energy independence
While you must rely on a charging station to recharge your vehicle’s battery, you can say goodbye to gas stations. With a home charging station, you can plug in your automobile when you get home from work and it will be ready to go the next morning.
Plus, public charging stations are popping up more frequently all over the country which may make traveling with an electric vehicle easier than ever.
Lower environmental impact
Electric automobiles produce no tailpipe emissions. While driving an electric car will not eliminate your transportation carbon footprint, it will significantly reduce it. Additionally, hybrid electric vehicle models utilize either gasoline or battery energy and are a popular option for those not quite ready to fully commit to an all-electric car.
Reduce inhaled emissions
Tailpipe emissions pollute both the environment and your vehicle’s interior to varying degrees, depending on factors such as the type of car you drive and its climate control system. Car emissions contain many dangerous carcinogens, including volatile carbon oxides, organic compounds and particulate matter. An electric car may help you avoid breathing in these emissions.
Reduce fuel expenses
Typically, fueling an automobile with gasoline or diesel costs more than the electricity expenses of operating an electric vehicle.
Extended battery life
Reports about electric car battery performance vary widely. However, based on predictive modeling conducted by the National Renewable Energy Laboratory, new technology has extended the life of some types of batteries up to 15 years. And research continues on ways to extend electric car battery life.
Reduce maintenance expenses
With an electric vehicle, you do not need to worry about regular oil changes or periodically changing incidental parts such as fan belts, gaskets and radiator hoses.
How much does electric car insurance cost?
The national average cost of car insurance is $2,014 for full coverage and $622 for minimum coverage. Data shows that, on average, full coverage EV insurance for a Chevy Bolt is actually slightly less than the national average. On the other hand, as luxury vehicles, full coverage insurance for a Tesla Model X is more than twice the national average.
Business Yield analyzed premiums for several makes and models using data provided by Quadrant Information Services to provide a point of reference for electric car owners. The following table lists the average minimum and full coverage premiums for some of the most popular electric models.
Note that your personal rates may vary significantly based on personal rating factors like your location, age, driving record and credit history.
| Electric vehicle | Average full coverage premium | Average minimum coverage premium |
|---|---|---|
| Chevy Bolt | $2,007 | $611 |
| Nissan Leaf | $2,024 | $607 |
| Tesla Model 3 | $2,577 | $605 |
| Tesla Model X | $4,364 | $803 |
| Tesla Model Y | $2,804 | $633 |
| Toyota Prius | $2,117 | $602 |
Where can I buy electric car insurance?
Drivers with electric vehicles follow the same steps to obtain EV car insurance as those with conventional cars. Electric car policies feature the same coverage options, such as liability, bodily injury, collision and comprehensive coverage. Most national and regional auto insurers write policies for electric vehicles.
While most auto insurers will extend auto policies for electric vehicles, you may have a hard time finding discounts for your electric vehicle. While you can expect to save money by avoiding the gas station and possibly pocketing some tax incentives, many insurance providers are not yet offering any discounts for drivers who choose an electric vehicle.
That said, we found a couple that are. Some large carriers, including Travelers and Liberty Mutual, extend exclusive discounts to electric and hybrid car owners.
Tesla Insurance
Tesla owners have a unique option for electric vehicle insurance. They may be able to purchase Tesla Insurance directly through the company’s mobile app. It offers all the same standard coverage options you would expect with a national carrier, plus a handful of endorsements that vary by state.
One potential endorsement is the Autonomous Vehicle Protection Package. This includes:
- Autonomous vehicle owner liability
- Cyber identity fraud expenses
- Electronic key replacement
- Wall charger coverage
Another feature of Tesla Insurance is that it uses real-time driving habits and behaviors to rate a driver’s car insurance policy. These are tracked by features within the Tesla itself and could change based on the vehicle’s monthly Safety Score. Drivers are not rated based on car insurance rating factors like age, claims history, and credit score.
Instead, Tesla analyzes the type of vehicle you drive, where you live, how often and how safely you drive and your selected coverage.
Currently, Tesla Insurance is only available in Arizona, Colorado, Illinois, Maryland, Minnesota, Nevada, Ohio, Oregon, Texas, Utah, and Virginia. It is also available in California but does not base rates on telematics data in this state. Additionally, if you are a California driver, but do not drive a Tesla, you may still be eligible for a Tesla policy.
How to save on electric car insurance
If you decide to purchase an electric vehicle, you may be able to save on insurance in many of the same ways conventional car owners do. If you already have an electric car and are curious about finding more affordable rates, consider requesting quotes from several providers. You might get a better deal by switching to another company.
You can also take advantage of discounts. Different companies offer different discounts, but some common ones include bundling, good student, claims-free and paperless billing.
If you own an electric vehicle, you may be eligible for savings beyond insurance. Many local, state, and federal programs exist that offer rebates or tax credits for having an electric vehicle. For instance, the California Clean Vehicle Rebate Project pays rebates up to $4,000 to Californians who purchase an eligible electric battery vehicle.
The federal government offers tax credits of up to $7,500 for purchasing certain makes and models of electric cars and SUVs purchased in or after 2023.
Here are some ways you can save on your electric car insurance.
- Shop around. The best way to save money is to compare car insurance quotes from several different insurers.
- Raising your credit score. Those with lower credit scores may pay more for car insurance coverage than those with higher credit scores.
- Ask for discounts. While some insurers offer green car discounts and alternative fuel discounts, you might be able to find even bigger price breaks through car insurance discounts for safe drivers, good students and bundling your auto and home insurance.
- Try a pay-per-mile plan. If you are using your electric car for short trips, a pay-per-mile auto insurance plan might be the best fit for you.
- Increasing your deductible. In car insurance, your deductible is the amount you pay before insurance covers the rest. Generally, the higher your deductible, the lower your premium. Consider your financial situation overall before making this move — you’ll need to make sure you could easily afford this cost if you were involved in an accident.
- Get rewarded for safe driving. If you are a safe driver, you may want to take advantage of your insurer’s usage-based insurance program, which tracks safe driving behaviors like speed, cornering, harsh braking and phone use.
- Looking for discounts. Some car insurance companies offer discounts for electric vehicle drivers, which could help lower your premiums.
- Bundling your home and auto insurance. Whether you rent your home or own it, bundling your homeowners’ insurance or renters insurance with your auto insurance coverage could help you save.
Why do electric cars cost more to insure?
When insurance companies set their rates, they’ll look at claims that have been paid for similar cars, among other things, and set their prices. For example, if your electric car model has a history of expensive and/or frequent claims, insurance rates for all owners of the model will generally be higher.
Here are some reasons electric cars can cost more to insure:
- Replacement parts. The cost to repair and replace electric parts is often more expensive than their non-electric equivalents. Replacement parts for an EV are 2.7% more expensive than replacement parts for a gas-powered car, according to a report from CCC Intelligent Solutions, a provider of data to the automotive, collision repair and insurance industries.
- Electric vehicle batteries. The cost to replace a damaged battery in an EV can range between $5,000 to $15,000, according to GreenCars, a website that provides tools and resources for electric car shoppers.
- Repair shops. Facilities may charge more for repairs because of the specialized training required to fix EVs.
Electric car insurance vs. gas car insurance
It costs about $100 more per year to insure an electric car compared to similar gas-powered models, according to a Forbes Advisor analysis of car insurance rates for top-selling vehicles.
Car insurance rates: Electric vehicles vs. gas vehicles
| Model | Average annual car insurance cost (electric model) | Average annual car insurance cost (gas-powered model) |
|---|---|---|
| Chrysler Pacifica | 1,986 | $1,891 |
| Ford Fusion | $2,041 | $1,865 |
| Ford Escape | $1,831 | $1,663 |
| Honda Accord | $1,888 | $1,988 |
| Honda CR-V | $1,831 | $1,574 |
| Toyota Camry | $1,970 | $1,899 |
| Toyota Corolla | $1,823 | $1,909 |
| Toyota Highlander | $1,904 | $1,757 |
| Toyota RAV4 | $1,776 | $1,704 |
| Subaru Crosstrek | $1,843 | $1,606 |
| Average | $1,889 | $1,786 |
| Source: Quadrant Information Services |
Which companies sell electric car insurance?
You can typically insure an electric car with most car insurance companies. It’s similar to buying insurance for a gas-powered car, and you’ll be able to buy the main types of car insurance, such as liability, collision, and comprehensive insurance.
Some insurance companies offer discounts for electric car owners. These might be called an “alternative fuel discount” or “green car discount,” depending on the company. Here are some insurers that offer discounts for electric cars (availability can vary by state):
- AIG
- Arbella
- Farmers
- Mercury
- Travelers
What is the cheapest electric car to insure?
The Chevy Bolt is one of the cheapest electric vehicles to insure with an average full coverage premium of $2,007 per year. This is about the same as the national average cost of full coverage car insurance, which is $2,014 per year. If you’re looking for minimum coverage car insurance, the Toyota Prius may be one of the cheapest options at $602 per year.
Keep in mind that other vehicle factors, like your car’s age and mileage, may also affect rates, so exploring quotes or speaking with an insurance agent may be helpful when looking for cheap electric vehicle coverage.
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