How much more do electric car owners really pay for insurance?

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With interest and demand for electric vehicles on the rise, MoneyGeek looked at insurance premiums — along with their combustion equivalents, when applicable — to find out how much more electric vehicle owners pay for auto insurance. Of the electric vehicles MoneyGeek used in its study, annual insurance premiums ranged from slightly over $1,300 to over $3,500.

Key Findings

MoneyGeek’s analysis of car insurance premiums for 17 current models of electric cars found:

  • On average, electric vehicle models cost 15% more to insure than conventional gas-powered vehicles.
  • Of the electric vehicle models that had corresponding combustion models, MoneyGeek found 6% to 40% higher premiums.
  • Teslas are amongst the most costly electric vehicles to insure.
  • 15 of the 17 EV models’ insurance rates were higher than the national average.


Which Electric Vehicles Are the Most Expensive to Insure?

Topping the list as the most expensive electric vehicle to insure is the 2021 Porsche Taycan at $3,567. That’s 1.5 times more than the $1,424 average annual cost of car insurance. The next three highest electric vehicle insurance rates are all 2021 Tesla models: the Tesla Model Y for $1,901, the Tesla Model X for $2,885 and the Tesla Model S for $3,022.

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At the lower end of insurance costs is the electric Hyundai Kona. The typical yearly insurance premium for this vehicle is $1,339 — just under the national average. However, these rates still don’t beat the popular, gas-powered Honda Accord, which costs $1,234 annually to insure. Even lower in costs is another combustion favorite — the Toyota Camry — which costs $1,267 to insure per year.

Most expensive electric vehicles (insurance)

Teslas Cost More to Cover Than the Majority of Electric Vehicles

Teslas are amongst the most expensive electric vehicles to insure. MoneyGeek’s review of 17 EV models found that 3 of the 5 electric cars with the highest insurance costs were the Teslas — specifically, the Tesla Model Y, the Tesla Model X and the Tesla Model S.

Generally, the more your car costs, the more expensive it is to insure — this is part of why Tesla premiums are higher-than-average. Another reason insurance is so costly for Teslas is that repair and maintenance costs tend to be much higher than most vehicles’.

A 2015 study by the Insurance Institute for Highway Safety (IIHS) reported that the Tesla Model S had higher claim frequencies, claim severities and overall losses than comparable large luxury cars.

The higher claim severity was thought to be attributed to the car’s battery replacement cost — a whopping $16,000. Kelley Blue Book reports that a battery replacement for the average vehicle runs between $45 to $250.

Insurance costs for Teslas are significantly higher than most other vehicles in their combustion categories. View the graph below to see how the insurance costs of each Tesla model compare to other cars in the same category.

Why Do Electric Vehicles Cost More to Insure?

Car insurance costs for electric vehicles tend to be much higher than combustion vehicles. But why are premiums so much higher for these cars?

In general, insurance for electric vehicles isn’t based on the same principle as traditional cars, explains Miranda Yan, the co-founder of VinPit, a car data company that helps users run searches about vehicle information or history.

According to her, there are a few key reasons why electric vehicles tend to cost more to insure:

1. They tend to be more expensive than combustion vehicles.

On average, electric vehicles cost more than combustion vehicles. MoneyGeek found that the Fair Price of the electric version of a car model is 50% higher than that of its gas-powered counterpart.

2. They’re more vulnerable to damage in accidents.

“There are many sensor-based applications [in electric vehicles]; thus, they are more vulnerable to getting damaged in accidents,” says Yan.

3. When parts are damaged, they’re more likely to be replaced than repaired.

Yan notes that EVs usually have varied size components and sensory-based parts that are generally not repaired and recommended to be replaced. “Insurance companies consider that the parts of electric vehicles, if in an accident, will likely need to be replaced, not repaired. That will increase the cost of the [expense], which will be paid by the insurance company,” she says.

4. Their parts are more expensive to replace.

“The increased price of the part will also increase the repair cost to the insurer,” Yan notes. For example, an advanced, engineered battery costs more for insurance companies to cover. On average, those batteries can cost about $7,350 to replace. That’s because the materials needed to power the battery and give it more energy are often expensive.

5. They’re more likely to be considered totaled.

“Because the market is still new for electric cars, part suppliers are less likely to lead to a less competitive market, making the parts costlier,” Yan says. “EVs are more expensive to repair, and in some cases, they may exceed Insured Declared Values as the market is not yet evolved to make the availability of the part radially, which increases the cost abruptly. Also, generally, it takes more time to repair and needs a different set of skilled technicians. Due to these constraints, they are considered totaled [more often after an accident].”

Comparable Make Model Analysis

On average, electric vehicles have significantly higher insurance costs than gas-powered cars. This difference is most apparent when you compare the insurance costs of electric vehicles and their combustion counterparts. MoneyGeek found that, on average, insurance for electric cars tends to cost 15% more than it does for a comparable combustion model.

Electric car costs for insurance

MoneyGeek also found that the Fair Price for a model’s electric version is 50% higher than its gas-powered equivalent. The table below shows the relationship between a vehicle’s purchase price and insurance premiums and demonstrates how much higher insurance costs are for electric cars.

Car insurance costs

Which Insurers Offer the Best Rates on Electric Vehicles?

Although insurance rates for EVs are often higher, many providers still offer competitive rates.

MoneyGeek’s review of 17 electric vehicle models showed that USAA offers the lowest rates across the board for an annual premium. However, keep in mind that this company only serves current military members, veterans and their families. The next most affordable provider is State Farm, followed by Progressive.

To find the cheapest car insurance, be sure to compare rates from several providers. Rates can vary by location and other factors like your unique driving record. Also, different insurers charge different rates for specific car models.

Insurance discounts can lower the cost of your annual premium. While the savings offered by each insurer can vary, most companies have bundling, safe driving and good student discounts that make it more affordable for many drivers. MoneyGeek recommends finding all available discounts a provider has and comparing quotes with other insurance companies to find the best rate.

Can Electric Vehicles Help You Save In Other Ways?

While insurance costs may be more expensive, owning an EV may save you money in some ways that conventional cars can’t.

  • Electricity costs less than gas. In many cases, it’s cheaper to charge an EV than it is to fill a standard vehicle. However, electric utility costs are different from state to state. Battery capacity and battery size also vary, as can gasoline prices by state and miles-per-gallon (mpg) of gas-powered automobiles — these factors can all affect how affordable it is to run an electric vehicle compared to a combustion car.
  • EVs have lower maintenance costs. Because EVs operate on a single component — the electric motor — they don’t have as many mechanical parts as gas-powered cars. That means less periodic maintenance services are required. Maintenance for EVs is estimated to cost $330 less than gas-powered vehicles on average annually.
  • You may qualify for government stimulus packages. There are many incentives for EV drivers on the state and federal level. Some of the perks can include:
    • A federal tax credit for plug-in electric vehicles (PEV) with certain terms
    • Tax credits and purchase rebates
    • Emission testing exemptions
    • Reduced utility charges or rebates for charging EVs
    • High-Occupancy Vehicle (HOV) lane access
    • Legislative support for EV purchases or mandated fleet requirements
    • Reduced licensing, registration or road use fees — although other states charge EVs additional fees
  • EVs are better for the environment. Emissions from the life cycles of EV batteries are typically less than an internal combustion engine vehicle. However, it’s important to also consider the way the electricity used to power an EV was generated, as these sources of electricity can also cause emissions. Fortunately, emissions from electricity generation are decreasing in some areas. They’ve fallen 38% since 1990 in the UK, according to an analysis by Carbon Brief. This decline has been largely attributed to a cleaner electricity mix based on gas and renewables instead of coal.

There are many factors to consider when weighing the benefits of an electric vehicle. The high insurance costs and purchase prices of some EVs may be unappealing to some drivers. However, different factors may be more important to others — like potential savings that can come with long-term ownership, such as fewer trips to the mechanic, reduced gas costs, government incentives and a lower carbon footprint.

Methodology

For this analysis, MoneyGeek collected data from Quadrant Information Services, Kelley Blue Book and Edmunds.com. We analyzed insurance premiums for various make, model and vehicle year combinations from national insurance providers in locations across the country.

The average driver profile is based on the following persona:

  • 40-year-old male
  • Clean driving record
  • Comprehensive and collision coverage of 100/300/100 with a $1,000 deductible
  • 12k miles driven annually

The comprehensive and collision selection provides coverage of $100,000 bodily injury liability per person, $300,000 bodily injury liability per accident and $100,000 property damage liability.

 

This article originally appeared on MoneyGeek.com and was syndicated by MediaFeed.org.

 

More from MediaFeed:

These states will actually pay you to buy a Tesla

 

Most people believe that a Tesla is out of their price range. With prices starting at $35,000 and going up to $124,000, the brand is definitely in the aspirational range for a lot of people. However, many states offer rebates and other incentives to buy electric vehicles, or EVs. The federal government also offers an income tax credit of up to 26% for green cars that run on alternative fuels, as well as for home utilities.

Some states even give you an additional discount for cars with solar and energy storage. If you’re in the market for a new car, and you’d like to green your drive, you can find out here if your state offers discounts for buying an electric or alternative fuel vehicle. Note that discounts and rebates are subject to change.

 

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Arizona will give electric car drivers a reduced vehicle license tax and access to carpool lanes. You can receive incentives for going green in your home, such as getting up to $1,000 in state tax credits for installing solar panels. There’s also a tax credit of up to $75 for installing electric vehicle supply equipment, or EVSE, in your house or housing unit. Most commonly, this means having an electric car charging station at your home.

 

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California gives $2,000 to $4,500 in rebates for buying a Tesla Model 3 and Model Y, depending on your income. The $1,500 California Clean Fuel Reward is available for anyone who registers a new electric vehicle in the state.

California also offers Plug-In Hybrid and Zero Emission Light-Duty Vehicle Rebates. The rebates are offered for purchasing or leasing of American Expedition Vehicles, or AEVs, as well as plug-in hybrid electric vehicles, or PHEVs. Battery electric vehicles and fuel cell electric vehicles are eligible as well.

If you bought an eligible car before March 28, 2016, you can get $5,000 in rebates. After that date, the rebate will be based on your annual income.  San Joaquin Valley residents can get up to $3,000 in rebates for EVs by using the Alternative Fuel and Advanced Vehicle Rebate.

Under the California Self-Generation Incentive Program (SGIP), anyone who buys or installs solar utilities may be eligible for additional incentives. That includes Tesla’s Powerwall.

 

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Colorado offers a tax credit of up to $4,000 for purchasing a new EV and $2,000 for leasing one. You could also be eligible for a tax credit of $5,000 for buying or converting a vehicle to electric or $2,500 for leasing a light-duty EV or PHEV.

Colorado also has various incentives for select solar utilities.

 

 

 

Tesla

 

Connecticut has a $1,500 rebate for new electric vehicles that cost under $42,000. There’s also rebates for electric or hybrid vehicles based off battery capacity. You can get a $3,000 rebate for a batter capacity greater than 18kWh, $1,500 for 10kWh to 18kWh, and $750 for less than 10kWh.

You can also get exemptions for state emissions tests and a reduced vehicle registration fee. For various solar utilities, you can get a discount of up to $300 per kW PTC.

 

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Delaware gives a $2,500 rebate for new EVs under $60,000 and $500 for having a home charging station. The Electric Vehicle Supply Equipment (EVSE) Rebates program  can cover half the cost of building a station at home and 75% of the cost of building one commercially.

The state also offers solar rebates for select utilities.

 

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Florida residents and business owners may get financial assistance for building a home charging station depending on their eligibility.

 

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Georgia’s Electric Vehicle Supply Equipment (EVSE) Tax Credit gives eligible businesses an income tax credit for buying or leasing electronic or hybrid vehicles.

 

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Hawaii will give you exclusive carpool lane access and a reduced EV charging rate to buy an electric car. You can also get a tax credit for solar utilities equal to either 35% of the system cost or $5,000 per 5 kilowatt, whichever cost is lesser.

 

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Idaho offers a state exemption from vehicle inspection for anyone purchasing or leasing an electric vehicle. You may also be eligible for other discounts under its vehicle maintenance program.

 

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Illinois offers exmeptions for state emissions tests for electric cars, plus reduced registration fees. Under the Electric Vehicle Supply Equipment (EVSE) Rebates, you can get half the costs of installing vehicle charging equipment at your home.

You can also earn Solar Renewable Energy Credits (SREC) for various green utilities and energy savings measures. The credits can be traded in for additional discounts. You can get a $1,000 discount per kilowatt on the cash or loan price of solar panels. If you invest in a solar roof, you can also receive $860 per kilowatt on the roof’s cash or loan price.

 

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Louisiana offers a $2,500 income tax credit for buying or leasing a hybrid or electric car.

 

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Maine residents may be eligible for a $2,000 rebate for new electric vehicles under $50,000.

 

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Maryland will give you access to hybrid and electric lanes and an emissions testing exemption when you switch to an electric car. There are additional tax credits of up to $3,000 available for buying a plug-in electric car. You can also get a $700 rebate on wall connectors and installation of a charging station.

The state gives a $1,000 per system rebate for solar energy and utilities.

 

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Massachusetts gives residents a $2,500 rebate for new vehicles costing less than $50,000. You can get up to $1,000 in state tax credits for using solar energy. The state also offers various incentives for using solar utilities and the Tesla Powerwall.

 

 

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Montana will give you a tax credit of up to half the price for equipment and labor costs if you convert your vehicle to an alternative fuel source, including electric.

 

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Nevada gives its residents a reduced rate for charging electric vehicles. You can also get free alternative fuel vehicle parking and an exemption from the state’s emissions testing requirement.

 

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New Jersey gives up to $5,000 in rebates for buying or leasing a new alternative fuel vehicle that costs less than $55,000. You’ll also get a sales tax exemption if you bought the vehicle in New Jersey.

Solar utilities can earn you up to $720 per kilowatt on the price of installing solar panels or $600 off a solar roof.

 

Petmal/ istockphoto

 

New York offers a $500 rebate for new vehicles with a base price over $60,000, and $2,000 for those under $60,000. You’ll also get an exemption from the state’s emissions testing requirement.

If you use solar energy or solar utilities, you can get up to $350 per kilowatt in rebates and up to $5,000 in state tax credits.

 

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North Carolina offers a state emissions testing exemption and car pool lane access to electric and alternative fuel vehicles.

 

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Oregon offer a rebate of $2,500 for purchase or lease of new or used Tesla cars. You can get a tax credit of 25% for any alternative fuel infrastructure project, including building an electric charging station.

Solar energy and utilities can also earn you a rebate of $300 per kilowatt up to $2,400.

 

 

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Pennsylvania residents can get a rebate for all-electric and plug-in hybrid cars. The rebates vary by the energy efficiency of the vehicle.

 

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Rhode Island alternative fuel vehicle owners are exempt from the state’s emission testing requirements. You’ll also be able to earn up to $100 per kilowatt off the cash or loan price of solar panels and $80 per kilowatt off the cash or loan price of a solar roof.

 

RoschetzkyIstockPhoto/ istockphoto

 

Texas gives $2,500 vehicle replacement vouchers for qualified residents to buy a hybrid or battery-electric car.

 

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Utah gives a tax credit for heavy-duty electric vehicles, which maxed out at $15,000 this year. To qualify, at least half of the car’s miles must be driven in the state.

 

 

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Vermont gives a rebate based on your income when you buy or lease an electric car under $40,000. The rebate maxes out at $5,000.

If you use solar appliances or solar power, you can get a 2 cent per kilowatt hour incentive for 10 years.

 

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Washington has a sales tax exemption for vehicles that cost up to $32,000.

 

 

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Washington, D.C. exempts alternative fuel vehicles from excise tax and offers a reduced vehicle registration fee. You can also get a tax credit for half the price of installing a home charging station that costs up to $1,000.

 

Solar power uses can earn $930 per kilowatt off the price of solar panels and $780 for a solar roof.

 

 

shironosov/ istockphoto

 

Wisconsin’s Alternative Fuel Tax Refund for Taxis allows vehicles that transport passengers to be reimbursed for the paid amount of the Wisconsin state fuel tax. Refund claims must be filed within one year of the fuel purchase date.

This article was produced and syndicated by MediaFeed.org.

 

 

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Featured Image Credit: Czgur/ istockphoto .

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