How much does it cost to insure an electric car?

Electric vehicles (EVs) have become more popular in recent years thanks to their environmentally friendly features. Currently, the electric vehicle market is valued at $273 billion and is projected to reach $802.75 billion in 2028. 

Although electric cars help you save money on gas, they are more expensive to buy than regular cars. Also, they are more costly to insure than their gas-powered counterparts. 

Which brings us to the question: How much does it cost to insure an electric car?

In this article, we’ll look into the cost of insuring an electric vehicle and list the top car insurance companies that offer EV insurance. We’ll also explore the various ways you can lower your electric vehicle insurance rates with discounts and tax breaks. 

How much does it cost to insure an electric car?

According to a recent study from Self Financial, the average cost to insure an electric vehicle is about $137/month or $1,636 annually.

Typically, you’ll pay more to insure an electric vehicle than a gas-powered automobile. This is primarily due to the higher cost of maintenance and repair associated with electric vehicles. Insurance companies know upfront that it will cost them more to replace an EV component than it would with conventional cars. 

For example, if a minor accident damages the electric car’s battery pack, the cost to replace this key component may exceed $15,000. 

Here are some average six-month premium costs for several electric vehicles.

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On average, EVs cost 15% more to insure than regular combustible vehicles. Tesla dominates the list of the most expensive electric cars to insure. 

Are electric vehicles cheaper to insure than conventional cars?

In short, no.

In most cases, it will cost you more to insure an electric car than a gas-powered vehicle. Here are the reasons why electric cars cost more to insure.

They’re More Expensive Than Combustible Vehicles

The average transaction price for an electric vehicle is $56,437. That’s roughly $10,000 higher than the industry average for combustible vehicles. And as a general rule of thumb, expensive cars cost more to insure due to the high cost associated with repair and components replacement.

They’re More Vulnerable to Damage in a Crash

Electric vehicles have complex systems and sensor-based applications that are more vulnerable to damage in an accident. This vulnerability is a high-risk factor to insurers and is often considered when determining the premiums for an EV.

Their Parts Are More Expensive to Replace

While electric cars come with fewer moving parts than combustible vehicles, their parts, especially the battery, are more expensive to replace. The lithium-ion battery, for instance, accounts for nearly 50% of the cost of the car. Damaging such an expensive component can be a massive blow to the insurer.

There are Fewer Electric Vehicle Mechanics

Electric vehicles require a high level of maintenance because of the complex onboard systems. That said, repairing EVs requires skilled mechanics to service the vehicle. Currently, the talent pool for repairing EVs is relatively small compared to conventional car mechanics.

There are Fewer Insurance Options

Not many insurers offer policies for electric cars. Fewer options limit your ability to comprehensively compare prices offered by different companies. 

What companies offer insurance for electric cars?

Insuring an electric car is no different than covering a regular vehicle. You’ll still be choosing a third-party, collision, or comprehensive policy. And you can still take advantage of the various add-ons offered by insurance companies.

That said, most national and regional insurers offer policies for electric vehicles, including:

• Geico
• Progressive
• Farmers
• Allstate
• USAA
• State Farm
• Liberty Mutual

Do insurance companies offer discounts for EVs?

Driving an electric car is great for the environment. But since insurance for electric vehicles is relatively new, many insurance companies don’t offer discounts for EVs yet. 

Some major players, including Travelers and Liberty Mutual, offer exclusive discounts to electric car owners. Others offer an “alternative fuel discount” or “green car discount” for going green. 

Ask your current insurance company if they have special discounts for electric vehicles that you can take advantage of. If they don’t have it, you can still take advantage of regular car insurance discounts, such as safe driving discounts, to lower your insurance rates. 

Other options you can try out to lower your EV premiums include:

You Can Get Savings With Tax Breaks for EVs

You can help offset the cost of insuring an EV by taking advantage of rebates at the local, state, and federal levels. You might also be eligible for a federal tax credit, depending on where you live and the make and model of your vehicle. 

For instance, the California Clean Vehicle Rebate Program gives Californians up to $4,500 in rebates if they purchase specific models of cars. The federal government also offers up to $7,500 in tax credits to residents who buy specified EVs. 

Electric Car Insurance: The Bottom Line

Electric vehicles typically cost more to insure than gas-powered cars. But that doesn’t mean you can’t get discounts and offers. Comparing rates from different insurance companies can help you get the best deal out there.