How Having an Electric Car Affects Your Auto Insurance Rates
How Having an Electric Car Affects Your Auto Insurance Rates
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Electric cars offer a number of positive and negative financial tradeoffs when compared to traditional cars, including gas prices, tax credits and range, among others. One key factor is the cost car insurance for your EV. Just how much of an impact does switching to an electric car have on your annual auto insurance premiums?
On average, we found that car insurance for an electric vehicle is about 23% more expensive than the cost for the equivalent combustion model.
We compared four types of electric cars to their gas counterparts 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.
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How much do car insurance rates increase with an electric car?
We compared four relatively affordable cars available in both electric and combustion models: 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.
>> LEARN MORE: The Cheapest Cars to Insure
Essentially, 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.
Cost of insurance for electric vs. gasoline cars, by model and insurer
Insurance Company | Ford Focus | Chevy Spark | Kia Soul | Fiat 500 |
|---|---|---|---|---|
| 1.07x | 1.06x | 1.08x | N/A | |
| 1.24x | 1.22x | 1.25x | 1.19x | |
| 1.23x | 1.30x | 1.35x | 1.45x |
>> LEARN MORE: Comparing Car Insurance Costs
State Farm increases prices the least for an electric car driver, with an average increase of just 7% on average. Allstate charges the most, with a typical increase of 33% for an electric model.
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?
One major factor why car insurance premiums are higher may be that the cost of the vehicles are higher. Electric vehicles tend to be filled with cutting-edge technology like high-capacity batteries, sophisticated sensors, and more. The more a vehicle costs, the more expensive it is to repair.
>> 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 | Gas | Electric | Percent cost increase for electric |
|---|---|---|---|
| Fiat 500 | $25,500 | $32,700 | 28% |
| Ford Focus | $19,790 | $29,960 | 51% |
| Kia Soul | $18,200 | $34,520 | 90% |
| Chevy Spark | $13,100 | $25,900 | 98% |
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
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