Electric Car Insurance: What You Need to Know

As you travel the road in your new electric vehicle (EV), the lack of engine noise isn’t the only thing that’s different — your auto insurance needs a revamp, too. With the higher price tag of electric cars and their complex repair processes, insuring an EV isn’t the same as your old gas-powered car.

There’s a lot to consider for new EV owners when it comes to auto insurance — from special discounts for electric or hybrid vehicles to unique challenges, like fewer qualified repair shops. We’ll help you find the best car insurance policy for your new EV, striking the perfect balance between protection and cost.

Key Takeaways:

• Car insurance costs 8% more on average for electric vehicles.
• USAA, State Farm, and GEICO have the cheapest average premiums for EVs.
• Premiums can vary by as much as 71% depending on the EV make and model.

Are Electric Vehicles More Expensive to Insure?

Yes, insuring an electric vehicle generally costs more than it does for a gas-powered car. On average, you’ll pay 8% more for electric vehicle auto insurance, according to Compare.com data. Our research found an average liability coverage price of $114 per month for EVs and a full-coverage price of $227, compared to $106 and $210 per month, respectively, for gas vehicles.

Why is electric car insurance more expensive? The higher rates are mainly due to the higher initial prices of EVs and the specialized — and often more costly — repairs they require.

Cheapest Electric Car Insurance Companies

When shopping for the cheapest car insurance companies, a few names lead the pack. USAA, State Farm, GEICO, and Allstate consistently offer competitive rates for electric car owners, according to our research, but rates depend on a variety of factors.

The table below lays it all out, showing average liability and full-coverage rates from a range of top insurers. It’s a clear snapshot of what you might expect to pay to insure your electric vehicle with these companies.

Looking at the numbers, you’ll notice quite a bit of variability in EV insurance rates. USAA has the most affordable premiums, but keep in mind that membership is available only to military members, veterans, and their families. State Farm and GEICO follow closely, suggesting that well-established companies are adapting to the EV insurance market.

The difference in rates between the cheapest (USAA at $49 for liability and $106 for full coverage) and the most expensive on this list (The General at $126 for liability and $272 for full coverage) shows just how important it is to shop around before choosing an insurer.

Electric vehicle insurance rates by make and model

Besides price differences between insurance companies, it’s also worth considering the coverage costs based on the make and model of the vehicle you choose. For example, the Hyundai Ioniq 5 is the cheapest EV to insure, according to our research. On the other end of the spectrum, the Tesla Model 3 stands out as the most expensive.

Most EVs fall somewhere in the middle. For example, if you look at the information in the table below, you’ll notice the wide range of insurance costs for different EV models.

Models like the Hyundai Ioniq 5 and Nissan Leaf offer significant insurance savings, according to our research — a factor that might appeal to budget-conscious buyers. But Teslas — particularly the Model 3 — come with a much steeper premium, reflecting the higher market value and repair costs.

Another fascinating insight is the close range in insurance rates among mid-tier models, like the Chevrolet Bolt and Kia EV6. This may point to a growing market segment where insurers offer more competitive pricing for popular mainstream electric vehicles.

Tips to Save Money on Electric Car Insurance

The average cost of electric car insurance is higher than that of a traditional vehicle, but several strategies can help keep premiums in check. We’ve outlined a few of the best below.

Opt for higher deductibles

Increasing your deductible — the amount you pay out of pocket before your insurance kicks in — can lower your monthly premiums. It’s a sensible option if you’re confident in your driving and can handle a higher out-of-pocket expense if you get in a car accident.

Bundle insurance policies

Bundling your auto policy with other insurance products, like homeowners insurance or renters insurance, can unlock possible discounts. Check with your insurer to see which multi-policy discounts it offers and how much you could save compared to purchasing policies separately.

Take advantage of discounts

Insurers often provide discounts for several reasons, including installing an anti-theft device or being a loyal customer. Savings for low annual mileage or advanced safety features can make a notable difference, and some companies even offer a discount for electric and hybrid vehicles.

Maintain a safe driving record

Insurers save some of the best rates for drivers with clean driving records. Your insurance company might also have a program that monitors your driving habits and gives discounts for safe driving practices.

Compare car insurance rates

Shopping around is key to getting the best deal on your car insurance premiums. Different companies often have different approaches to how they price policies for EVs, so don’t settle for the first quote you get. Instead, compare rates to see how much you could save.

The Rise of Electric Vehicles and Its Impact on Insurance

Electric vehicle sales are speeding up as purchases hit record highs, thanks to soaring fuel costs and attractive tax credits for EV buyers.

The U.S. offers a federal tax credit of up to $7,500 for purchasing an EV — an incentive that states like Colorado and Maine match at the state level. Other states (and some private companies) offer rebates ranging from a couple hundred dollars to a few thousand.

That said, this rapid growth presents a challenge for insurers, both in terms of claim frequency and the overall cost to pay out these claims. With more EVs on the road, insurers are seeing an uptick in EV insurance claims. This causes them to raise rates to keep up with the advanced systems that bring a new layer of complexity and higher replacement costs.

Factors That Affect Electric Vehicle Insurance Rates

When starting your search for car insurance, know that several factors come into play when insurers determine the rates for your EV. These include:

• Sticker price: Generally, EVs are pricier than gas-powered vehicles. The more expensive technology, electric motors, and battery packs lead to higher insurance premiums.
• Repair costs: Limited repair shops, the need for specialized mechanics, and a potential lack of available parts drive up repair costs, which also influences auto insurance rates.
• Battery size and type: The battery is a critical component of an EV and can be expensive to repair or replace. An EV battery’s size and type can drive premiums up or down.
• Safety and security features: Most EVs have advanced safety and security features, which can lead to cheaper insurance costs due to a lower risk of accidents and theft.
• Driving range and use: The typical range of an EV on a single charge and its intended use can have a small effect on the cost of insurance. Vehicles with a longer range likely have a higher MSRP, affecting average rates.

How to Choose the Best Electric Car Insurance

The trick to getting the right insurance for your EV is to balance coverage and cost. Here’s how to choose the best auto insurance company for your situation.

1. Assess your needs and coverage requirements

Your first step is to understand what you need from an insurance company. Consider factors like your EV’s value, how often you drive, and where you live to identify the type of coverage that fits your situation. For instance, is a minimum-coverage policy enough, or would you benefit from higher limits? And depending on your EV’s value, you may want to consider comprehensive or collision coverages, even if you don’t have a loan or lease.

2. Research different electric car insurance companies

Insurance companies aren’t created equal, especially for electric and hybrid cars. Look into companies that offer specific EV policies or discounts. Compare at least two insurance companies to find one that understands EV-specific needs.

3. Evaluate customer service and claim assistance

A poor experience can sour even the best rate. Check online customer reviews and industry ratings to see how responsive and supportive a company is, especially in handling claims. Reading policyholder reviews helps you know what to expect if you ever need to make a claim.

4. Consider additional car insurance coverage

Specialty EV coverages — such as battery replacement or charging equipment coverage — can provide more protection and peace of mind when you own an electric car. You might even want to consider an agreed-value policy since EV repairs can be so expensive. Explore several insurance companies to see if any offer these additional options.

Electric Car Insurance FAQs

As electric vehicles continue to rev up in popularity, they raise new questions about insurance. Here are answers to common questions about electric vehicle insurance.

Why is insurance so expensive for Teslas?

Tesla is known for its higher-end technology and performance, which leads to increased insurance costs. Teslas have higher MSRPs and resale values than most EVs. And their lack of access to aftermarket parts and sparse Tesla-approved service centers mean repairs cost more. All of these factors mean higher insurance costs.

Does insurance cover EV battery replacement?

Insurance coverage of an EV battery depends on the reason for replacement. If the damage is from an accident, fire, or other covered event, insurance may help cover the cost. If normal wear and tear causes it to stop working, you may be able to get an EV battery replacement if your car is still under warranty, but insurance won’t cover it.

Does Allstate insure electric vehicles?

Yes, Allstate provides insurance policies for electric vehicles. You’ll find similar coverage options for EVs as for conventional cars. But remember that protection needs can be different for EVs. It’s important to discuss insurance needs with your agent to find the best coverage.

Are insurance companies going to stop insuring electric vehicles?

Not at all. Electric vehicles are becoming more common, and insurance companies are working to better understand and accommodate the unique coverage needs of these vehicles. Policies and rates may change as insurers adapt to the effect of technology and cost on claims and repairs.

Methodology

Data scientists at Compare.com analyzed more than 50 million real-time auto insurance rates from more than 75 partner insurance providers in order to compile the quotes and statistics seen in this article. Compare.com’s auto insurance data includes coverage analysis and details on drivers’ vehicles, driving records, insurance histories, and demographic information.

All the quotes listed in this article have been gathered from a combination of real Compare.com quotes and external insurance rate data gathered in collaboration with Quadrant Information Services. Compare.com uses these observations to provide drivers with insight into how auto insurance companies determine their premiums.

Sources

1. U.S. Department of Energy, “Alternative Fuels Data Center,” Accessed March 9, 2024.
2. Drive Electric Colorado, “Myth Insurance Safety,” Accessed March 9, 2024.
3. Mitchell, “Taking Charge: How EVs are Impacting Auto Insurance and Collision Repair,” Accessed March 9, 2024.
4. Wall Street Journal, “Why Are Gasoline Prices So High?” Accessed March 9, 2024.
5. IRS, “Credits for new clean vehicles purchased in 2024 or after,” Accessed March 9, 2024.
6. EV CO, “Are You Eligible for an EV Tax Credit?,” Accessed March 9, 2024.
7. Efficiency Maine, “Electric Vehicle Incentives for Low- and Moderate-Income Mainers,” Accessed March 9, 2024.
8. Bloomberg Law, “Tesla Monopoly on Repairs, Parts Gouges Car Owners, Suits Say,” Accessed March 9, 2024.