In the past few years, the automotive industry has witnessed a significant shift due to the increasing adoption of electric vehicles (EVs). As reported by BWAutoWorld, the electric vehicle market is expanding and will continue to grow by approximately 47% every year from 2022 to 2027.
As the world aims for greener and more eco-friendly ways of getting around, electric cars have taken the lead in this movement. But, with more people choosing electric cars, picking the right insurance is crucial to protect these silent yet powerful machines.
Therefore, this comprehensive guide aims to explore the realm of electric car insurance by shedding light on some of the top car insurance plans specifically tailored for electric cars. Not only this, but the guide also discusses the benefits of e-car insurance and various other important aspects.
What the Rise of EVs Means for Consumers
EVs come with a wide range of benefits for consumers beyond lower fuel costs: they have fewer moving parts that can break down, they don’t need oil changes and they’re generally easier on brake systems than their gas-powered counterparts. However, EVs also come with higher price tags, meaning they cost more to insure than traditional combustion-engine vehicles.
Why Are EVs More Expensive To Insure?
Along with the fact that EVs cost more than most traditional cars, their parts are more expensive to repair and replace. According to Kelley Blue Book, these are two primary reasons consumers see higher car insurance premiums for EVs.
In March 2023, the average price of a new EV reached $58,940. This is more than $10,000 higher than the industry average cost of a new vehicle at that same time, which was $48,008. Because a vehicle’s MSRP directly impacts the cost of car insurance, EV owners are bound to see higher costs for coverage.
High repair costs play a significant role in determining EV insurance premiums as well. While there are fewer components at risk of breaking down in an EV, the parts that do require repair or replacement are much more expensive. This is especially true if an EV’s battery pack is damaged. Consumer Affairs found that the average cost to replace an EV battery ranges from about $4,500 to nearly $18,000.
EV owners also face a shortage of qualified repair shops and technicians. The specialized training required to repair electric vehicles means fewer available options and higher charges for customers when repair needs arise. All of these factors drive up insurance costs for EV drivers.
Key Takeaways:
- According to the IEA, worldwide EV sales are projected to grow to nearly 37 million by 2030 — almost four times as many as in 2022.
- Although EV drivers typically pay higher-than-average insurance rates, costs to insure EVs should fall as vehicle prices moderate and auto insurers adjust coverage options.
- High MSRPs and repair costs are two of the leading factors that contribute to EVs’ expensive car insurance rates.
Average Insurance Costs: EVs vs. Gas Vehicles
Electric cars tend to be more expensive when it comes to average insurance costs as well, though it varies by a vehicle’s make, model and year. The national average cost of full-coverage car insurance in 2023 is $2,024 per year. Coverage costs for the electric vehicles on this list are higher than the national average by anywhere from 10% to 135%.
The Rise of EVs: Conclusion
The story of how EVs will affect the car insurance industry is still to be written. What we do know is that insurers will need to adjust coverage options and train agents to smoothly handle EV-related claims as they grow alongside EV market share in the U.S. While consumers are currently paying higher-than-average premiums to protect their electric cars — and can continue to expect high costs in the near future — average premiums will likely level out as the market adapts to the rising number of EVs on the road.