Quality Verified | Posted September 6, 2023

Does It Cost More to Insure an Electric Vehicle?

While the powertrain of an electric vehicle may be different, not much changes when it comes to covering your new vehicle.
Picture of Alan Rider
Alan Rider

AAA Staff Writer

There are a lot of reasons you may want an electric vehicle. Surprisingly satisfying acceleration, reduced emissions, dramatic fuel savings and lower maintenance costs, to name just a few. 

 

While those are all undeniable upsides to driving an electric car, there is one area where you’re likely to find EV ownership to be a little more spendy – insuring your new ride. 

A Bit More

Before you start fretting over the idea of higher insurance costs for EVs, rest assured that the increase is relatively modest. 

 

Ray Eng, Vice President of insurance sales at AAA Northeast, says EV policies average about 25% more than for a comparable gasoline-powered model. For good reason. 

 

“The first thing to know is that auto insurance isn’t based as much on what’s under the hood as it is factors like the cost to replace or repair your vehicle,” Eng explained. 

 

Electric vehicle insurance rates have more to do with these environmentally friendly models tending to have higher prices on their window stickers to begin with. 

 

“Generally speaking, electric vehicles are going to be more expensive to purchase,” Eng said. “So, it logically follows that, if the vehicle were seriously damaged or totaled in an accident, the replacement cost would be higher.” 

 

Figure in that, since EV models are still relatively new, parts and labor are likely to be more expensive simply because of supply and demand. The availability of repair shops with special tools and individuals with specific training may ultimately impact the total insurance cost. 

Same, Same

Other than that, insuring an electron-fueled model will feel very familiar. For starters, much of the lingo you’re used to, such as types of coverage (liability, collision and comprehensive), policy limits and deductibles, also applies to electric vehicle insurance.  

 

Ultimately though, the biggest factor affecting EV insurance rates isn’t what moves it down the road. It’s the person sitting behind the steering wheel. 

 

“The cost of insuring your new electric vehicle is based on the same factors that affect rates for most cars,” said Eng. “As is the case with any auto policy, the most important thing you can do to reduce the cost of insuring your EV is to maintain a solid driving record without collisions and moving violations.”  

The Good News

All that said, there are a couple of bright spots here. Federal tax credits for buying an EV – up to $7,500, depending on the model – may well help offset some of these additional costs. Some state, regional and local governments also offer incentives.  

 

There are also the overall lower costs of fueling and maintaining an electric vehicle. Electricity to power an EV for 15,000 miles can be roughly $700 less than covering the same distance in a comparable gasoline-powered model, according to AAA estimates. Add in the reduced maintenance EVs require – no oil or air filter changes, for example – and the savings begin to add up. 

EV Insurance Down The Road

As with any advanced technology, from televisions to cellphones, time may ultimately be the great equalizer, according to Eng. 

 

“As EV models become more common, it’s likely that repair and replacement costs will gradually come down, lowering insurance rates in the process,” he said. 

AAA’s Recommendation: Whether you own an electric vehicle or a gas-powered car is up to you – and you should consider lots of factors in making that choice. No matter what type of vehicle you’re choosing, we recommend visiting a dealership, test driving one, and asking as many questions as possible to make an informed decision.

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