Car Insurance for Electric Vehicles
It seems like hybrid and electric cars are new, but you might be surprised to learn that they’ve been around since the late nineteenth century. A decade or two ago, most consumers saw electric vehicles as expensive, environmentally friendly toys that could barely get from one town to the next without a recharge. But many of today’s models cost just a little more than conventional automobiles, and some manufacturers claim ranges up to 620 miles on a single charge.
Insuring an electric car is as easy as buying a policy for a gas-powered vehicle. Typically, insurance costs a little more for electric vehicles, but the fuel and maintenance savings you’ll enjoy may offset the cost difference. If the latest plug-in vehicle has caught your eye, learn more about insuring your energy-efficient ride.
Are electric cars more expensive to insure than gas cars?
Typically, electric cars cost at least 20 percent more to insure than combustion engine models, because they have higher sticker prices and they cost more to repair. For example, battery packs for some electric vehicles cost $15,000 or more to replace. Insurance companies don’t like high risks, so they charge higher premiums for electric automobiles to offset the potentially high cost of future claims.
We requested insurance quotes from Progressive for a few of the most popular electric cars. We used a profile of a male, unmarried car owner who is 40 years old and lives in San Francisco. The quotes were for $15,000/$30,000/$15,000 in liability coverage and $15,000/$30,000 for uninsured and underinsured motorist coverage. The deductibles for both comprehensive coverage and collision were $1,000.
While your individual numbers will be different, our quotes using this profile can give you a rough estimate of the cost difference in electric and non-electric vehicles.
|Make and model||Average annual premium||Electric car rate % difference|
|2018 Ford Focus||$1,004|
|2018 Ford Focus Electric||$1,234||+23%|
|2019 Fiat 500||$1,236|
|2019 Fiat 500 EV||$1,500||+21%|
|2019 Volkswagen Golf||$1,072|
|2019 Volkswagen E-Golf||$1,496||+40|
Are electric cars more expensive to insure than hybrid cars?
Generally, electric cars cost more to insure than hybrid cars do, but it depends on the make and model of automobile you purchase. Based on our research, some hybrid cars cost less to insure than gas-powered versions of the same vehicle. We requested insurance quotes from Progressive using the same driver profile we used for electric cars, this time getting quotes for several gas and hybrid vehicles:
|Make and model||Average annual premium||Hybrid car rate % difference|
|2020 Ford Escape||$956|
|2020 Ford Escape Hybrid||$1,170||+22%|
|2020 Kia Optima||$1,346|
|2020 Kia Optima Hybrid||$1,172||-13%|
|2020 Toyota Corolla||$1,318|
|2020 Toyota Corolla||$1,168||-11%|
|2020 Toyota Rav4||$1,182|
|2020 Toyota Rav4 Hybrid||$1,226||+4%|
What kind of insurance do you need for electric vehicles?
Electric vehicle owners need the same types of coverage as conventional car owners. All states require you to carry minimum amounts of certain types of coverages, while others are optional. Standard auto insurance coverages include:
- Bodily injury and property damage liability coverage: If you’re at fault for an accident, your bodily injury and personal property liability coverage will pay the other driver’s medical and auto repair expenses. All states require liability coverage.
- Medical payments coverage: Medical payments coverage pays the medical costs and lost wages of you and your passengers following an accident. Some states require you to carry medical payments coverage or personal injury protection coverage, which pay medical costs regardless of who is at fault for an accident.
- Uninsured and underinsured motorist coverage: When a motorist with inadequate coverage or no auto insurance causes an accident, uninsured and underinsured motorist insurance helps pay your medical and car repair expenses. Many states require this coverage.
- Collision coverage: If you finance your car, the lender will require you to buy collision coverage, which pays to repair or replace your vehicle following an at-fault accident.
- Comprehensive coverage: Comprehensive insurance covers non-collision damages and losses, such as a stolen vehicle or hail damage. States don’t require comprehensive insurance, but if you finance your automobile, the lender will.
Most car insurance companies also offer optional coverages to increase your protection.
- Car rental coverage: If your vehicle needs repairs following a covered accident, this coverage can help pay for a rental car. Some insurance companies include car rental coverage in collision and comprehensive policies.
- Roadside assistance: When you break down on the road, roadside assistance coverage can pay for jump starts, tire changes and towing.
- Glass coverage: While collision and comprehensive policies may pay to repair or replace broken car windows and windshields, optional glass coverage policies don’t usually require you to pay a deductible.
- Gap insurance: If you finance a new vehicle and total it within the first year or two, the insurance company likely will pay you the actual cash value of the automobile. In many cases, the claim you receive won’t be enough to pay off the loan. For totaled vehicles, gap insurance helps pay the difference between the claim payment and the remaining loan balance.
- Autonomous vehicle coverage: Some states allow autonomous – driverless – vehicles, while others don’t. Check with your state’s department of insurance or department of motor vehicles about insurance requirements if your vehicle features driverless functionality. Tesla Insurance offers an Autonomous Vehicle Protection Package, however, the insurer only provides coverage for California Tesla owners.
Are electric cars worth the higher insurance and purchase costs?
Upfront costs can put off some shoppers who are considering an electric vehicle. A 2020 Volkswagen Golf starts at around $24,115, while the 2020 E-Golf starts at $33,000. Setting up a home charging station costs $200 to $1,000 for equipment, plus $800 to $1,300 in installation fees.
However, don’t let the higher cost of insurance and upfront costs dissuade you from purchasing an electric vehicle. Compared to their gas guzzling siblings, electric vehicles typically cost less money to operate and maintain. Electric motors have fewer moving parts than combustion engines do and require less regular upkeep. They use fewer fluids such as oil and transmission fluid, which can save you a bundle on regular maintenance. The regenerative brake systems on electric cars also don’t burn through brake pads as quickly as gas-powered automobiles.
Electric car manufacturers now offer long battery warranties, eight years or 100,000 miles, on many vehicles. Plus, you can save on fuel throughout the life of the vehicle. According to the U.S. Department of Energy, in January 2020, Americans paid an average of around $0.128 per kilowatt hour of electricity. Typically, electricity prices are more stable than gas prices. When gas prices reach $2.25 per gallon, electric car owners pay just $1.25 for the same amount of fuel. If you purchase an electric car that requires 50 kWh to charge, you’ll pay around $6.40 per fill up. Over time, the lower fuel and maintenance costs of an electric car can lead to substantial savings.
Also consider local, state and federal programs that reward motorists who buy energy efficient automobiles. For example, California’s Clean Vehicle Rebate Project pays rebates from $1,000 to $7,000 to residents who purchase electric and hybrid vehicles. Plus, the federal government offers tax credits up to $7,500 for buying an electric car.
How to get car insurance for electric vehicles
Major car insurance companies write policies for electric and hybrid vehicles. When shopping for auto insurance, always get as many quotes as possible. Compare details such as coverage amounts, deductibles, limits and inclusions such as rental car reimbursement and roadside assistance. Look for discounts to lower your rate too. Insurers offer loads of discounts and some, including Travelers and Liberty Mutual, extend special discounts to electric and hybrid vehicle owners.
While premium rates are an important factor in choosing an insurance provider, also consider each insurer’s financial strength and customer service track record. You can research an insurance company’s credit rating on the AM Best website and read reviews and complaints at the Better Business Bureau website.
To narrow your search, review J.D. Power’s U.S. Auto Insurance Study. J.D. Power conducts an annual survey of auto insurance companies, rating each provider based on factors such as claims handling, billing process, customer interaction, policy offerings and price, to compile regional rankings.
Before shopping for insurance, visit the website of your state’s department of insurance or department of motor vehicles to determine the types and levels of coverage required by law. If you financed your car, read the loan contract or contact the lender to find out how much collision and comprehensive coverage you must purchase. And, before signing an insurance contract, use the National Association of Insurance Commissioners’ license lookup tool to make sure the insurer you chose holds a current license in your state.
While insurance can be a little more expensive for electric cars, you can still find ways to save money on your premium, and the car itself can turn out to be less expensive in the long run while being better for the environment.