Tired of the sticker shock you experience every time you fill up at the gas pump? Want to reduce your carbon footprint? Consider driving an electric vehicle (EV) or hybrid.
But like owners of fully gas-powered automobiles, buyers of electric and hybrid cars need to insure their vehicles. But what does it cost to insure an EV or hybrid?
This guide will help you learn more about EV car insurance, insurance rates, hybrid/electric car insurance discounts, and more.
Getting car insurance for an electric car
Getting car insurance for an EV is similar to shopping for insurance for any other vehicle. Make sure you get quotes to compare the rates of at least three companies as rates are highly variable on each driver and their location, a driver’s history and the make and model of the car.
“The depreciation on Teslas and other electric/hybrid vehicles is lower than for many gas-powered cars. They really seem to hold their value and their reliability seems to be very good,” says Fred Balkin, a personal injury attorney with Stein Sperling in Rockville, Maryland.
Here are three things to do when you’re buying a new insurance policy:
- Determine how much you can expect to pay and gather vehicle/personal information.
- Review your current policy and assess your current coverages – you might want to increase your coverage levels and limits if purchasing a more expensive vehicle.
- Compare insurance quotes and research insurers to find the best one for you.
Cost of car insurance for EVs vs. hybrids vs. gas-powered cars
Again, you can likely expect to pay more to insure a hybrid or electric vehicle than you would for a gasoline-powered car for previously mentioned reasons like higher repair costs.
Amy Harris, a State Farm Insurance spokeswoman, says her company uses a variety of factors when determining the price for each auto insurance policy attached to a hybrid or EV.
“Prices for individual customers are influenced by a policyholder’s driving record, the make and model of the vehicle, who drives the vehicle, how it is driven and the amount and types of coverage selected – among other things,” she says. “For State Farm auto customers, there is not much difference in insuring an electric or hybrid car compared to a gasoline-powered one. We use the same underwriting guidelines for all these vehicles.”
P.J. Miller, a partner and independent insurance agent with Wallace & Turner Insurance, says he hasn’t noticed a significant rate disparity between premiums for EVs/hybrids versus gas-powered cars.
“Car insurance rates are predicated on so many factors – credit scores, location of the garage and the vehicle, driving record and price of the car. The engine and powertrain haven’t factored in as a major portion of the typical rate-making process,” Miller says.
FAQs: Car insurance for EVs
Do you need extra insurance coverage for EVs?
Experts recommend considering optional car insurance coverage for any vehicle if you want more protection and peace of mind, including rental reimbursement, roadside assistance, glass coverage, accident forgiveness, umbrella insurance and non-owner car insurance.
“Gap insurance is a good additional coverage to purchase if your electric or hybrid vehicle is three years or newer,” says Janet Ruiz, director of strategic communications for the Insurance Information Institute. “With gap coverage, in the event of a total loss, you will get the newer model year replacement.”
Learn more: How much does electric car insurance cost?
What are the benefits of driving electric vehicles?
Electric vehicles depreciate at a similar rate to gas-powered vehicles, according to a 2020 report from Consumer Reports.
“New electric vehicles that go at least 200 miles on a single charge are projected to maintain their value as well as comparable gas-powered vehicles over the next five years,” the report says.
“New data show that both battery electric vehicle (BEVs) and plug-in hybrid electric vehicle (PHEVs) drivers are saving 50 percent on their repair and maintenance costs when averaged over a typical vehicle lifetime.”
Additionally, tax credits of $7,500 are available for new EVs if the following criteria are met:
- The vehicle has four wheels
- It doesn’t weigh more than 14,000 pounds
- Its battery provides at least 4 kilowatt-hours (kWh) of power
- It gets charged from an external source
Pros and cons of hybrids versus EVs versus gas-powered cars
Andre Disselkamp, the co-founder of Finsurancy, an insurance broker, says hybrids, EVs and gasoline-powered cars have advantages and disadvantages. Gas-fueled vehicles are usually more powerful and faster than hybrids or EVs, making them better for drivers requiring those capabilities.
“Hybrid vehicles are often seen as the best option for those looking to reduce their carbon footprint. They are powered by gasoline and electricity, meaning they produce minimal emissions. When stored electrical power in the batteries runs out, the gasoline engine kicks in. Every time you brake, you begin to recharge the battery,” Disselkamp says.
In the spring of 2023, CarInsurance.com conducted a nationwide drivers survey on electric vehicles, car insurance companies, inflation and more. The study found that 44% of drivers said electric cars are more expensive to maintain than gas-powered vehicles. Only 16% of drivers said EVs are cheaper to maintain, and 40% said the costs are comparable.
EVs are more expensive; gas-powered vehicles require more maintenance
Michael Kim, co-founder of Evcharger Reviews – a site that reviews EVs and EV home chargers – says electric vehicles are typically more expensive than hybrids and gasoline-powered cars.
According to the 2023 drivers survey, 44% of drivers said that cost is the main reason they wouldn’t purchase an EV; 22% said not enough charging stations was the reason they wouldn’t buy an EV, followed by a short range (13%) and frequency of charging (9%).
“However, hybrids and gasoline-powered cars require more regular tune-ups and maintenance than electric vehicles,” Kim says. “Over the long run, EVs may be less expensive to own and maintain than hybrids or gasoline-powered vehicles.”
Ruiz says consumers have more choices today regarding the vehicles they drive.
“There are various options for consumers to use renewable energy by purchasing a hybrid or electric vehicle. They may be more expensive to purchase initially. However, they are less expensive to fuel – especially if they are entirely electric and fueled by plug-in charging stations,” she says.
Some EVs like the Chevrolet Bolt and Nissan Leaf are two of the most affordable EVS and there will be more affordable EVS on the market in the next few years, according to Kelley Blue Book.
Before committing to an electric or hybrid car, you must do your homework and learn the average cost to charge or fuel each month and whether you want to own or lease the auto to keep your monthly payments affordable.
Learn about the hidden costs of owning an electric car
FAQs: Electric vehicles
Will an in-home EV charging station affect my homeowners insurance?
Having an in-home EV charging unit in your garage or on your property should not affect your homeowners insurance premiums negatively, says Janet Ruiz, an Insurance Information Institute representative. But it’s important to inform your insurer that you have an in-home EV charging unit to cover it in case of a loss.
Will my car insurance cover EV roadside assistance?
Roadside assistance coverage may be included in your automobile insurance policy at no extra cost. Your carrier may charge extra for this protection, regardless of the type of vehicle you drive.
Sources
Consumer Reports. “Electric Vehicle Ownership Costs: Today’s Electric Vehicles Offer Big Savings for Consumers.” Accessed May 2022.
Consumer Reports. “Electric Vehicles May Cost More to Insure Than Gasoline-Powered Cars.” Accessed May 2022.
Insure. “Ranking the most expensive and cheapest cars to insure for 2022.” Accessed May 2022.
Kelley Blue Book. “Busting the Myths and Fears of Buying an Electric Car.” Accessed May 2022.
Progessive. “Is insurance more expensive for electric vehicles?” Accessed May 2022.
Methodology
CarInsurance.com commissioned survey company Slice to survey drivers nationwide in 2023 about their driving habits, favorite driving songs, the best roads and DMVs, inflation and attitudes about car insurance. The survey was conducted March 24 – April 4, 2023. There were 2,300 respondents.
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