With electric vehicles (EVs) gaining popularity, from Teslas to Ford jumping in the EV game, understanding insurance coverage for these eco-friendly rides is crucial to protecting your investment and ensuring you’re adequately covered.
According to data from the U.S. Department of Energy, there were over 2.4 million electric vehicles registered in 2022. California had the greatest number of electric vehicle registrations, followed by Florida, Texas, Washington and New Jersey. Gas savings and reduced environmental impact are two reasons to make the switch.
But you might save on gas while paying more for insurance. This guide will help you navigate the world of electric car insurance and find the right plan for your needs. You can find a good policy for a fair price with the best car insurance companies. Read on for electric car insurance tips and key considerations.
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How does insurance for electric cars work?
Electric car insurance works similarly to traditional auto insurance, with a few key differences. Like regular car insurance, you’ll typically need liability coverage, which protects you if you cause an accident that damages someone else’s property or injures them.
You can also consider collision damage coverage, comprehensive coverage, or other options based on how you use the vehicle. For example, you can choose rideshare insurance if you plan to use the car as a rideshare driver.
EVs often require additional coverage options due to their specialized components and higher repair costs. For example, you may need coverage for the battery pack, which can be expensive to replace. Below, you’ll find seven types of coverage you might get for your electric vehicle.
While electric vehicles tend to cost more to insure than comparable gas-powered models, this is largely due to their higher sticker prices. In addition, electric cars may need extra coverage options like coverage for EV chargers. However, there are ways to lower your car insurance costs. In addition, as an EV owner, you might qualify for unique discounts or tax rebates that can offset some of the higher premium costs.
7 Coverage options for electric cars
When insuring your electric vehicle, consider the following seven types of car insurance coverage:
1. Liability insurance
This coverage is mandatory in most states and protects you if you cause an accident that damages someone else’s property or injures them. Liability insurance is foundational insurance for most drivers and covers the costs of repairs, medical bills, and legal fees.
2. Collision insurance
Collision insurance specifically covers the costs of electric vehicle repairs if you’re involved in an accident, regardless of who is at fault. Since electric vehicle repairs can be more costly, this can be a valuable add-on.
Replacement parts for an EV are 2.7% more expensive than for a gas-powered car, according to a report from CCC Intelligent Solutions. In addition, the cost to replace a damaged battery in an EV can be between $5,000 to $15,000. And finally, repair shops may charge more for repairs because of the specialized training required to fix EVs.
3. Comprehensive insurance
If you want an all-in-one solution, consider comprehensive insurance. This coverage protects your EV from non-collision incidents such as theft, vandalism, or damage from natural disasters like hail or falling objects. If you live in an area with a high risk of either vandalism or natural disasters, comprehensive insurance can help you save significantly. You can also learn more about how to get the cheapest full-coverage insurance.
4. Medical payments
This coverage helps pay for medical expenses for you and your passengers if you’re involved in an accident, regardless of who is at fault. This can be especially valuable if you don’t have strong health insurance or if you regularly transport other passengers without good health insurance.
5. Roadside assistance
This coverage provides assistance if your electric car breaks down or runs out of charge. Some providers offer emergency charging services to get you back on the road. This can be especially helpful to give you peace of mind if you’re new to electric vehicles.
Car insurance companies typically charge an additional $2 to $5 a month, or $15 to $60 a year for roadside assistance. Alternatively, you can pay $50 to $360 annually for auto club memberships, which include roadside assistance.
6. Uninsured/underinsurance motorist
Uninsured or underinsurance motorist coverage protects you if you’re involved in an accident with a driver who doesn’t have insurance or doesn’t have enough coverage to pay for the damages. While liability insurance is required in most states, if you’re in an accident with another uninsured driver—and it’s their fault—having uninsured motorist coverage can give you extra protection. You can learn who gets the insurance check when a car is totaled.
7. Rideshare insurance
If you use your electric car for ridesharing services like Uber or Lyft, you may need additional coverage to protect you while you’re working. Rideshare insurance can bridge the gap between personal auto insurance and the coverage provided by the rideshare company, ensuring you’re covered, whatever happens. You can also learn about high-risk auto insurance and whether it fits your needs.
Is it more expensive or cheaper to insure an electric vehicle?
Insuring an electric vehicle can be more expensive than insuring a conventional gas-powered car. Several factors contribute to this:
- Higher purchase price: Electric cars typically have a higher sticker price than their gas-powered counterparts, which can translate to higher insurance premiums.
- More expensive to repair: EVs have specialized components, such as battery packs and electric motors, which can be costly to repair or replace.
- Higher EV accident payout: Insurance companies may need to pay more for repairs or replacements if an EV is involved in an accident due to the expensive components.
While EVs may be more expensive to insure initially, you could save money in the long run due to lower fuel and maintenance costs. Likewise, according to the IRS, you may qualify for a credit of up to $7,500 under Code Section 30D if you buy a new, qualified plug-in EV or fuel-cell electric vehicle (FCV).
How to lower your electric car insurance premiums
While insuring an electric vehicle can be more costly, there are several ways to reduce your insurance premiums:
Compare insurance quotes from multiple providers
Shopping around and comparing quotes from different insurers can help you find the most affordable coverage for your electric car. While this is the simplest step, it’s the most essential. Consider providers that specialize in EV insurance, as well as major national brands when shopping for new car insurance.
Look for discounts
Many insurers offer discounts for electric vehicles, good driving records, bundling policies, or taking defensive driving courses. If you have a strong driving history or want to bundle several types of insurance, you could potentially save more.
Maintain a good driving record
Related to the previous point, a clean driving record with no accidents or traffic violations can help you qualify for lower insurance rates. If you’re under 25, you may still face high premiums, but after 25, with a strong driving record, you might get lower premiums.
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Opt for a higher deductible
Choosing a higher deductible can lower your monthly or annual premiums, but make sure you have enough savings to cover the deductible if you need to file a claim. For example, you could choose a $1,000 or $2,000 deductible, but you’ll need an emergency fund to cover that deductible if needed.
Consider bundling your car insurance with other policies
Many insurers offer discounts if you bundle your electric car insurance with other policies, such as homeowners or renters insurance. Bundled insurance policies can help you save more and also simplify monthly payments.
Protect your electric vehicle investment
Insuring your electric vehicle is essential to safeguard your investment and ensure you’re adequately covered. By understanding the coverage options, considering the potential costs, and exploring ways to lower your premiums, you can find the right insurance plan for your electric car and drive with peace of mind. Need more ideas? Get help determining how much car insurance you need, and find the 10 critical reasons you need car insurance.
FAQ
Does car insurance cover EV battery replacement?
Some insurers offer coverage for EV battery replacement, but it may be an additional cost or require a separate policy. Check with your insurer for details, and be sure to compare replacement costs before choosing a policy.
Does an EV charging station affect your homeowners’ policy?
Installing a charging station at your home may require updating your homeowners’ insurance policy to ensure it’s covered if damaged or causes any issues. However, you’ll need to speak with your homeowner’s insurance provider to understand the impact on your policy.
Will my car insurance cover my charging equipment?
Some insurers offer coverage for EV charging equipment, either as part of your auto policy or as an add-on. Check with your insurer or potential insurer for details.
Does car insurance cover electrical problems?
Electrical problems can be a major issue with EVs. Most standard auto insurance policies cover electrical issues and malfunctions, as long as they’re not related to normal wear and tear or improper maintenance.
What is the cheapest electric car to insure?
Insurance also relates to the vehicle’s value. For that reason, smaller and more affordable EVs like the Nissan Leaf or Chevrolet Bolt tend to cost less to insure compared to luxury or high-performance electric models.
