Cost to insure an electric vehicle is on average 21% higher than gas vehicles, according to a study by NerdWallet. Higher insurance rates are one of the roadblocks for the wider adoption of EVs in the US.
Tesla Model S, which costs $80,000 costs approximately $3,300 to insure. Depending on the state you live, you could get insurance for a gas-powered model for a third to half that rate.
Reasons Why Insurance Rates For Electric Vehicles So High
Electric vehicles are pricier, so it costs more to insure
The cost to insure is based on the price of the vehicle insured. The electric versions of cars are 25% to 75% more expensive than their gas counterparts, which leads to higher insurance rates.
Tax credits may sometimes make the vehicle cheaper to buy but when it is time to get insurance, insurance companies look at the unsubsidized price of the vehicle to quote you rates.
Electric cars are expensive to repair
In case of an accident, electric cars are more expensive to repair. Not all shops or mechanics can work on electrics. Working on an electric vehicle is a specialized job that costs more.
Electric vehicles also have complicated components like batteries which are expensive to replace. As electric cars become more popular, it may become easier and less expensive to repair in the future.
EVs are generally smaller and offer less protection if you are in a crash. Insurance companies tend to charge higher premiums to compensate for the higher risk.
How To Save Money On EV Insurance
Which EVs are cheaper to insure?
While Teslas are expensive to insure, some EVs don’t break the bank. Analysis shows Kia Soul EV, Nissan Leaf, Audi-Etron, and Chevy Bolt EVs have the cheapest insurance rates among EVs.
Late models are cheaper to insure (and also to buy)
It’s should come as no surprise that older models are cheaper to buy and cheaper to insure. So if you want to buy an EV and save money, a late model EV is a good bet.
Insurance rates vary widely across insurance companies
While insurance rates were higher for electric vehicles across the board, the relative increase compared to gas-powered cars varies widely. StateFarm charged 7% more whereas Geico and Allstate were 25% higher.
Shop around for best rates
Since insurance rates vary widely across insurance companies, you should always shop around. More so than you would for gas vehicles to get the best rates.
Ensure that you are getting every possible discount you are eligible for. Did you take a driver’s safety course? Do you drive fewer miles? Are you willing to have a device in your car that monitors your driving behaviors in exchange for a discount?
Due to higher price of the vehicle and higher repair costs, insurance rates are higher for EVs. That does not mean that you should not buy an EV. Buying the right vehicle and shopping around to get the insurance best rates will keep your annual costs down. Buying late-model vehicles will also help you save money on insurance.