Electric Car Insurance: Does it Still Cost More in 2024?

Car insurance for electric vehicles (EVs) generally costs more than insurance for gas-powered vehicles for two very important reasons. EVs tend to be more expensive than their fossil-fuel-burning counterparts, and on average they still cost more to repair.

The average new EV sold for $61,448 in December 2022, while the average new car across all categories sold for $49,507, according to Kelley Blue Book.^[1] And while EVs may need less maintenance than gas-powered vehicles, when they do need significant repairs those are generally more expensive.

Are car insurance rates higher for EV cars?

Drivers can generally expect to pay higher premiums for electric cars compared to internal combustion engine (ICE) cars. 

“The cost of your insurance is based on the value of your car, your location, and your individual factors,” explains Heather Zoller, a Maryland-based Certified Insurance Counselor.

That said, Zoller hasn’t necessarily seen a drastic difference in premiums between EVs and ICE cars among her clients. This may be due to car buyers shopping solely for either an EV or an ICE, rather than comparing the costs of owning the EV versus the ICE of a particular make and model.

For example, a car buyer might not choose between the EV Ford Mustang Mach-E (starting MSRP of $46,895) and the gas model Ford Mustang (starting MSRP of $27,770), but instead between the Mustang Mach-E and the Tesla Model 3 (starting MSRP of $43,990). Such car buyers may compare the cost of insuring the two EVs, rather than comparing the cost of insuring an electric versus gas vehicle.

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EV vs. gas model car insurance rates

Understanding the full cost of owning an EV compared to its gas-powered counterpart requires comparing the difference in car insurance rates. Here are the car insurance rates for EVs versus their gas model counterparts (where available), based on Insurify data.

Why does it cost more to insure an electric vehicle?

Several factors influence the higher cost of premiums for electric car insurance:

• EVs are more expensive than comparable ICE cars.

• EVs repairs may require specialized knowledge or equipment.

• EV battery damage may require special safety protocols.

• EV batteries are expensive to replace, costing up to $15,000 — and that doesn’t necessarily include labor.^[2] For comparison, a replacement battery for a gas vehicle generally costs between $45 and $250.

Here are the starting MSRPs for EVs compared to their gas-powered counterparts, where available, according to Kelley Blue Book. These price differences help explain the potentially higher cost of electric car insurance.

How much is car insurance for electric vehicles or hybrids per month?

Insurify’s research found that the average monthly cost for car insurance for a gas engine car is $248, while the cost for an EV is $357. That’s a 44% difference in premium costs. But why do EVs cost so much more to insure?

As of 2015, “electric vehicles were associated with fewer collision and property damage liability claims, but increased severity [of those claims],” according to the Insurance Institute for Highway Safety.^[3] In other words, while electric vehicle owners made fewer claims (and were presumably in fewer accidents), the claims they made were for more severe damage, which costs more to fix. 

Since 2015, the difference in severity between EV and ICE insurance claims has diminished, according to the 2020 Highway Loss Data Institute bulletin — but insurance premium differences are still evident.

“It can take the insurance industry a few years to analyze losses with new technology,” Zoller says. “The industry is keeping an eye on fires in EVs right now, for example.”

That means the cost of electric car insurance may change. If the trends outlined by the HLDI bulletin continue, those costs may go down.

Electric vs. gas car insurance costs by year

The average cost of car insurance for gas and electric cars increased over the past two years, but gas model cars are still slightly less expensive to insure. In 2023, the average cost of car insurance for an EV is 26% higher than for gas-powered vehicles. But the good news is, the cost gap appears to be closing. In 2021, that cost difference was 37%.

Electric vs. gas car insurance

Your premium costs have little to do with your vehicle’s fuel source — but everything to do with the cost to purchase and repair your car. The more a car costs, the higher your premiums will be, since your insurance is protecting a more expensive asset.^[4]

Additionally, newer technology is costlier to repair. There are fewer professionals with the knowledge and equipment to repair new tech, meaning those mechanics can charge a premium for their labor. It may also be more difficult or expensive to get necessary parts for new technology. For example, EV batteries have some difficult-to-source components that make them very expensive to replace.

Electric vehicles are also often on the forefront of other innovative automobile technologies, which can affect their insurance costs. For instance, all Tesla models built after a certain date have the capability for Autopilot, Enhanced Autopilot, and Full Self-Driving (FSD). These systems are intended to reduce the driver’s workload behind the wheel, but self-driving processes are riskier to insure, which may be reflected in a Tesla driver’s insurance premium.

How to save when insuring an electric vehicle

Though EV drivers can spend 44% more on insurance premiums than gas vehicle owners, you have several ways to save money on your electric car insurance. Some of these strategies include:

• 

  Shop around for rates

  Comparing multiple auto insurance quotes is one of the best ways to ensure you’re getting the best insurance for your budget. An online quote-comparison tool like Insurify makes it simple, easy, and quick to check the rates of several insurers at once so you can feel confident you’re getting the best insurance coverage for you at the lowest price.

• 

  Improve your credit score

  Increasing your credit score will not only help your finances, but also potentially reduce your auto insurance premium. You can improve your score by paying your bills on time and paying down any outstanding debt.

• 

  Increase your deductible

  The deductible is the amount of money you pay before your insurance coverage kicks in for a claim. Requesting a higher deductible will reduce your premiums. However, make sure you can easily afford the higher deductible if you do need to make a claim.

• 

  Become a better driver

  Drivers who have had no moving violations or insurance claims for three years or more usually pay less for insurance than those who have more recent violations or claims.

• 

  Ask about discounts

  Many insurers offer a number of discounts to their customers, including loyalty programs, bundling discounts, anti-theft device discounts, and more.^[5]

• 

  Take advantage of tax breaks

  The IRS offers a tax rebate of up to $7,500 to EV buyers who meet other eligibility requirements. While this tax break doesn’t directly reduce your insurance premiums, the rebate can help offset the higher cost of insurance. In addition to the federal tax credit, some states and municipalities also offer tax breaks for EV owners.

What are the cheapest car insurance companies for EV owners?

Many companies offer electric vehicle insurance coverage. Comparing rates and coverage levels between insurers will help you find the right auto insurance for your needs. Nationwide provides the lowest average monthly quote for electric vehicles, while the highest quote, from The General, is 92% higher. Keep in mind that many other factors can affect car insurance rates, including driver profile.

What are the cheapest states for insuring electric vehicles?

The cost to insure an electric vehicle can vary from state to state. This is partially related to the fact that location affects all auto insurance rates. Insurance rates vary based on where you drive and park the car most often, since that can affect your likelihood of getting into an accident and making a claim.^[4]

EV insurance can also vary depending on how common electric cars are in your state. In states with low EV purchase rates, there’s less infrastructure in place to repair electric cars, meaning insurance will be more expensive. The good news is that EVs are becoming a much more common sight on America’s roads.

“There’s been an uptick in EVs in the last few years,” Zoller says. “The average family or average older couple has more EV options to choose from.”

Based on Insurify data, Tennessee is the cheapest state in which to insure an electric vehicle. The following states have the lowest average insurance rates for electric vehicles:

What are the benefits of driving electric vehicles?

Drivers are making the switch to EVs for a number of reasons. Some of the key benefits of these cars include:

• Fuel savings: Driving an EV means no more stops at the gas station. (And driving a hybrid means gassing up a lot less often.)

• Energy efficiency: EVs are generally more efficient than their gas-powered counterparts.^[6]

• Environmental impact: EVs produce zero tailpipe emissions, which reduces a driver’s carbon footprint.^[7]

• Reduced maintenance: EV motors require less regular maintenance than gas engines. This saves EV drivers both money and time.^[6]

• Tax incentives: You may qualify for up to $7,500 in federal tax rebates, as well as potential state and local government tax incentives, when you buy an eligible EV and meet the other eligibility requirements.

Do insurance companies offer discounts for electric cars?

Some insurance companies offer discounts to EV drivers. These discounts might be called a “green car discount” or an “alternative fuel discount” and could take a small percentage off the cost of your premiums. Here are some insurers that offer EV discounts:

• Arbella: EV drivers in New England may be eligible for an energy-saving vehicles discount of up to 10% off their premium with Arbella.

• Farmers: Both hybrid and EV drivers can save 5% on all major coverages with Farmers’ alternative fuel discount.

• Mercury Insurance: Drivers in 10 of the 11 states Mercury Insurance serves may be eligible for an EV discount.

• Travelers Insurance: Hybrid and EV drivers may be eligible for a discount through Travelers.

See Also: How Long Does a Tesla Battery Last?