Electric Car Insurance

By law, you must have car insurance to operate a motor vehicle in almost all 50 states. If you own an electric vehicle, you’ll likely find yourself paying more for your insurance when compared to other drivers operating gas-powered vehicles. 

Learn more about the factors that affect EV insurance — and how you can save on coverage. 

What is an Electric Car?

Electric cars are vehicles that have an electric motor that is powered by a battery. Gas-powered vehicles use combustible engines, unlike electric vehicles. Robert Anderson introduced the first crude electric car in 1832, but these vehicles wouldn’t be considered practical until the 1870s. 

Toyota introduced the first mass-produced hybrid in 1997, which is the well-known Prius. The popularity of electric cars has fluctuated since the first developments, but the demand and desire for these vehicles has gained a lot of traction in more recent years. 

Electric vehicles, sometimes referred to as EVs, can be either an all-electric vehicle, a plug-in hybrid vehicle or a hybrid electric vehicle. Most all-electric vehicles have a range of 80 to 100 miles, but others can go up to 370 miles on a single charge. 

Plug-in hybrid and hybrid electric vehicles have both an engine and electric motor. Plug-in hybrid vehicles run on electricity until the battery is depleted, then switch to an internal combustible engine. Plug-in hybrid electric cars are able to be recharged, whereas hybrid electric vehicles cannot be charged and rely solely on regenerative braking. The first hybrid electric car was introduced in 1901. 

While it is a smaller percentage of the industry, there are sports cars that run on electric motors as well. Companies like Ferrari, Lamborghini and Porsche have all begun to incorporate electric motors into some of their high-performance cars. Electric sports cars combine electric motors with gasoline engines, which can result in increased power and better fuel efficiency. 

Electric cars offer independence from the reliance on gas stations with the ability to install home charging stations. While installing a home charging station can be a major investment, they allow you to avoid volatile gas prices and save a good amount of money on gasoline. Electric vehicles are also environmentally friendly because they don’t produce tailpipe emissions. This means they aren’t polluting the air in the same way that an entirely gas-powered car usually would. 

Are Electric Cars Expensive to Repair?

One of the reasons that electric car insurance tends to be higher than conventional car insurance, is because electric cars can cost more to repair. You may be saving money by not having to do regular oil changes or replacing the radiator hoses or fan belts, but electric cars can suffer damage more easily than their gas-powered counterparts. Insuring an electric vehicle exposes an insurance company to higher value claims, which will increase your insurance rate. 

Electric cars are great for efficiency and they have fewer moving parts than gas-powered vehicles. However, this becomes an issue when one part is damaged in an accident because that one part may have multiple functions. 

The entire part then needs to be replaced and replacing an entire part can be costly. When you take into account that not every auto repair shop has the expertise to work on electric cars, this can add an even higher cost to an already expensive repair bill. 

Insurance companies are actually more likely to determine an electric car totaled than a gas-powered car because they’re so fragile. The actual technology of electric cars is also a factor for increased costs. There aren’t as many extra or used parts for electric cars out there when you compare them to traditional gas-powered vehicles. This means that most parts will need to be replaced with original equipment, which is a higher cost.   

Batteries Are Expensive, Too

When inspecting an electric vehicle that has been damaged, repair shops and insurers will always check the battery of the vehicle. If a battery is damaged or leaking, it can be extremely dangerous to both the repair professional and the driver of the car. If the battery of the vehicle is deemed to be unsafe, the repair shop will need to replace it, which can be incredibly expensive.

While today’s electric vehicle’s batteries are more durable than those in years past, they can’t last forever. Electric vehicle batteries lose a small percentage of their range annually. The batteries are supposed to last many years, but eventually they will need replacing, which will be a major cost to you as the driver. However, automakers are federally required to warrant electric vehicle batteries for eight years or up to 100,000 miles, depending on which comes first. This can help with repair costs in case insurance does not cover as much as you would like.   

Electric vehicle batteries are basically like the battery that powers your phone or laptop, but much bigger and comprised of hundreds or thousands of smaller batteries working in tandem. The materials that are required for a battery are what make it so expensive. Metals like cobalt, nickel, lithium and manganese all need to be mined, processed and converted, which increases their cost. The cost of battery replacements and the fragile components that make up electric vehicles all play a role in the higher rates you’ll pay for electric vehicle insurance.       

Some Insurers Do Not Accept Electric Cars

While most major insurance companies, like Allstate, Geico and Liberty Mutual, offer policies for electric vehicles, it may be an issue if your preferred insurer does not. As it’s illegal to operate any type of motor vehicle (electric or not) without at least your state’s minimum level of insurance coverage, this could become a major problem for you. 

Insurance companies determine insurance rates for electric vehicles using the same factors they would when assessing a conventional car. They look at vehicle type, model, model year, engine size and other factors, including your driving history, age and the number of years of experience you have on the road. 

Electric cars are typically a more expensive vehicle than a gas-powered car, resulting in higher insurance rates. This is because the insurer has to pay a higher claim for an electric vehicle than a traditional gas-powered vehicle. Some companies (especially smaller insurance providers) elect not to take this financial risk and refuse to extend policies to electric vehicle owners. 

While some insurance companies don’t provide policies to electric vehicle owners, many do. If you’re having trouble finding an insurance provider in your area, be sure to consider a few of our favorite insurance companies offering policies for electric vehicles.  

Insuring Your EV

No matter if you purchased an electric vehicle to help save Mother Earth or just to save a bit of money on gas, you’ll be quick to find that insuring your ride might cost a little more time and money than expected. Like any other type of insurance, every insurance company uses its own unique formula to determine how much you’ll pay for your coverage. 

This means it’s possible to find the exact same coverage for your vehicle at 10 completely different price points with 10 different companies. Be sure to leave yourself plenty of time to compare all of your insurance options before you spend on a policy. 

Frequently Asked Questions