How Having an Electric Car Affects Your Auto Insurance Rates

How Having an Electric Car Affects Your Auto Insurance Rates

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Deciding whether an electric car is a cost-effective purchase can be a kind of quagmire. From gas prices to tax credits, numerous factors can make electric cars both cheaper and costlier. One often-overlooked factor, however, is car insurance. Just how much of an impact would switching to an electric car have on your annual auto insurance premiums?

To evaluate this, we compared four types of electric cars to their gas counterparts as a benchmark to see how your insurance quotes may go up when you opt for an electric car. The actual increase (or decrease) will depend on the car you're driving now, and other factors such as your driving history and coverage selected.

Contents

How much do car insurance rates increase with an electric car?

We explored the Fiat 500 series, Ford Focus, Kia Soul and Chevy Spark. All of these cars have gas and electric versions and are all priced between a $13,000 and $25,000 MSRP range. The chart below shows how insurance rates increased for the electric versions of the cars based on the quotes we pulled from GEICO, State Farm and Allstate. The sampled quotes came from New York.

electric

>> LEARN MORE: The Cheapest Cars to Insure

Basically, if your premium with a gas car was $1,000 a year, you would instead be paying anywhere from $1,180 to $1,320 a year for the electric version; on average that is a 23% difference in price. Not every insurance company increases rates the same, however. In our analysis, we found the three companies vary quite wildly when it comes to insuring electric cars.

Car insurance rates of electric cars compared to their gas versions across different insurance companies

Insurance Company

Ford FocusChevy SparkKia SoulFiat 500

State Farm

1.07x1.06x1.08xN/A

GEICO

1.24x1.22x1.25x1.19x

Allstate

1.23x1.30x1.35x1.45x

>> LEARN MORE: Comparing Car Insurance Costs

State Farm doesn't seem to really care if you have an electric car seeing as they only require you to pay about an additional .07 cents per dollar on your premium. Allstate is not so accommodating and could end up asking you for an additional .35 cents per dollar in the case of the Kia Soul EV. Having the diligence to shop between insurance companies could mean a huge difference in savings on auto insurance rates for your electric car.

Why is there a difference?

As to why an electric car is more expensive to insure than a gas car may not be as obvious as other factors influencing car insurance premiums. Getting into an accident, or receiving a DUI, are factors that make you seem like a riskier driver, and for insurance companies, the riskier you are, the more you need to pay in premiums. Be sure to check for discounts for which you may be eligible.

>> LEARN MORE: Car Insurance Discounts

While having an electric car does not make you a riskier driver per se, it does make you a greater liability in the eyes of the insurance companies. This is, in part, due to electric cars being more expensive to purchase than gas cars. In the table below you can see how the electric and gas versions of the cars we studied differ.

Car

GasElectricPercent Difference

Fiat 500

$25,500$32,70028%

Ford Focus

19,79029,96051%

Kia Soul

18,20034,52090%

Chevy Spark

13,10025,90098%

MSRP values from Kbb.com (Kelley Blue Book)

Clearly, electric cars are costlier than their gas counterparts. If you were to crash your Chevy Spark EV, it would cost more money to repair it, let alone replace it, than a normal Chevy Spark. Thus, even if the driver is not riskier, insuring an electric car can potentially expose the insurance company to more expensive costs than insuring a gas car.

As electric cars become more the norm, repairing them may become easier and less expensive, thus driving back down the rates. For now though, if you are interested in getting an electric car, and do not want to pay more for the insurance, the best option is to shop around between different insurance companies and see which one quotes you the lowest rates.

>> LEARN MORE: Insuring a Tesla

Mark is a Senior Research Analyst for ValuePenguin focusing on the insurance industry, primarily auto insurance. He previously worked in financial risk management at State Street Corporation.

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