Electric Car Insurance: What You Need to Know

Thinking about making your next car an electric vehicle? Or recently bought an EV and need to insure it? We’ve got you covered.

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Updated March 29, 2022

In the market for an electric car? Soon, it’ll be time to lock in the best car insurance for your new ride. You’re probably wondering how your insurance policy might differ from the auto insurance you had when you drove a gas-powered vehicle.

The main difference between an auto insurance policy for an electric car and policies for a gas-powered one is that insuring an electric car is slightly more expensive, for a variety of reasons we’ll get into here. Other than a slightly increased cost, auto insurance policies for electric vehicles are quite similar to traditional auto insurance coverage you’re used to. 

That said, electric vehicle drivers can still take advantage of the same savings strategies that have helped them save on car insurance rates as they did before making the switch from driving with gas. 

In addition, there is also an array of potential discounts you can get when you purchase an electric car that can offset higher insurance costs. These include rebates and state and federal incentive programs, which can add up and mean big savings once you drive your new electric car home.

A quality insurance policy is extremely helpful to EV owners. It’s an important means to protect your investment and make sure you’re not stuck with expensive repair costs in the event of an accident or natural disaster.

Why Are EVs More Expensive to Insure?

electric vehicle charging

It probably comes as no surprise that it’s more expensive to insure a new Tesla Model X than the cheapest car on the lot. In fact, according to a study by NerdWallet, car insurance rates for electric vehicles are 21% higher on average than those for traditional gas-powered vehicles.

For example, a driver in California who drives a gas-powered 2021Toyota RAV4 XSE can expect to pay around $46 a month for liability insurance. That same driver with a RAV4 XSE Prime — which is the exact same vehicle, but with a plug-in hybrid powertrain — is looking at an average rate of around $58 a month — a nearly 30% increase in monthly premiums.

The main difference that results in higher insurance costs for electric cars compared to gas-powered cars is the initial price you’ve paid for the vehicle. In the above example, a gras-powered 2021 Toyota RAV4 starts at just over $26,000, while the plug-in hybrid models start at more than $38,000.

In the eyes of car insurance companies, driving a more expensive vehicle makes you a greater liability.

This comes as no surprise, and has been commonplace in the auto insurance industry for years. The more a car is worth, the more auto insurance companies have to pay if it is damaged, totaled, or subject to theft.

Conventional vs. Electric Car Insurance: Maintenance Costs

While insuring an electric vehicle may be costlier than a gas-powered one, EVs are much more affordable in terms of maintenance

Gas-powered vehicles require an array of upkeep and constant survey of fluids to make sure their internal combustion engine (ICE) stays running well, from complex gear systems to clamp and rotor brake systems to numerous belts and oil changes. 

Much of the conventional maintenance motorists are used to becomes a thing of the past upon their purchase of an EV. 

The U.S. Department of Energy conducted a study that compared the scheduled maintenance costs of gas-powered cars against electric vehicles. 

The scheduled maintenance tasks they considered ranged from oil changes to brake pad and wiper blade replacement. 

This research estimated the cost of maintenance for a “light-duty” gas vehicle at 10.1 cents per mile driven. Compatible battery electric vehicles, meanwhile, cost just 6.1 cents per mile. 

That considerable savings can go a long way toward paying off higher insurance premiums.

How to Save on Electric Car Insurance

Woman comparing car insurance quotes while charging her electric car

While insurance premiums for electric cars may be higher than those for gas cars, you can still use the same methods you always have to save.

Some of the strategies drivers can utilize to save on their car insurance premiums include:

  • Being an attentive, careful, and safe driver with a good driving record. 
  • Improving your credit score and maintaining it.
  • Adding multiple vehicles to your policy to take advantage of multi-vehicle and/or multi-policy discounts.
  • Reducing annual mileage on your vehicle.
  • Combining your homeowner’s insurance and car insurance into one package.
  • Getting car insurance quotes from multiple companies.

Compare quotes from dozens of top companies for free

Drivers looking for electric car insurance can also use tools like our Car Insurance Calculator and Car Insurance Comparison finder to find the most affordable car insurance quotes and to survey the array of insurers available in their area. 

The total cost of an insurance policy for your all-electric vehicle can also be reduced in a variety of ways, including local and federal tax credits often granted to new electric vehicle purchasers.

Federal law mandates that battery packs on electric vehicles be covered for a minimum of eight years or 100,000 miles. But that may not be long enough considering how long you plan on owning your car. 

Finally, look into potential extended warranties that are available for your EV to make sure you’re covered after your initial warranty expires. 

The Bottom Line

Electric vehicles are more expensive to insure than gas-powered vehicles. That said, new EV drivers can also save money in ways drivers of gasoline cars cannot. Reduced annual maintenance costs and taking advantage of state and federal incentive programs can also go a long way in helping to reduce the higher insurance premiums that come with owning an electric vehicle.

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