As the number of electric vehicles increases, so will the availability of in-vehicle services and goods, including insurance. The changing landscape presents challenges and opportunities for the auto insurance business as the globe prepares for a shift allowing environmentally friendly electric vehicles to replace traditional cars. Falling EV pricing, longer battery ranges, and adequate charging infrastructure will contribute to the global proliferation of EVs, hence expanding the market for EV insurance.
Charging infrastructure, immature supply chains, and global supply-side issues are all having an impact on EV insurance prices. These difficulties will be resolved over time, and EV insurance prices will be more comparable to those of traditional vehicles.
The insurance cost difference between electric and gas-powered cars used to be far greater, but it has recently narrowed. There were fewer repair shops when electric vehicles were newer; even the batteries cost significantly more.
However, as costs have reduced (the Department of Energy says that the price of battery packs decreased by 90% between 2008 and 2022), so have insurance premiums. As the vehicles gain popularity, the insurance for electric cars approaches that of gas-powered automobiles.
The cost of insuring your EV might vary significantly based on its model. A Chevrolet Bolt owner would pay approximately $2,000 yearly for complete coverage, whereas a Tesla Model X owner would spend roughly $4,300 annually for the same coverage. The average motorist in the United States pays approximately $2,014 per year for full coverage insurance on an electric-powered automobile.
The global EV insurance market is estimated to increase at a CAGR of 16.88% between 2023 and 2032, from USD 52.02 billion in 2022 to USD 247.49 billion by 2032. In 2022, North America led the market.
Insurance companies determine their rates by, among other things, looking at claims that have been settled for cars that are identical to one another. For instance, all owners of the same electric car model will often pay higher insurance premiums if the model has a history of costly or frequent claims.
Electric car insurance may be more expensive for the following reasons:
Spare parts: Electric parts are frequently more costly to replace and repair than non-electric counterparts. The price of replacement parts for an electric vehicle is approximately 2.7% higher than that of parts for a gas-powered car.
Batteries for electric vehicles: An electric vehicle's damaged battery replacement might cost anywhere from around $5,000 to $15,000.
Repair shops: Due to the specific skills needed to fix EVs, facilities could charge more for repairs.
Here are some strategies to save money on electric car insurance if you are purchasing an EV:
Look around: Comparing auto insurance quotes from many insurers is the most effective approach to save money.
Request discounts: While some insurers provide green car and alternative fuel discounts, you can get even greater savings by taking advantage of car insurance discounts for safe drivers, good students, and bundling your auto and home insurance.
Consider a pay-per-mile plan: If you only use your electric car for short distances, a pay-per-mile auto insurance policy may be the best option for you.
Get rewarded for driving safely: If you are a safe driver, you may want to use your insurer's usage-based insurance program, which measures safe driving behaviors such as speed, cornering, hard braking, and phone use.
An EV extended warranty is a vehicle service contract that covers repairs for particular elements of your electric car. Remember that many factory warranties cover EV batteries for at least the first eight years or 100,000 miles of ownership if you intend to purchase an EV extended warranty. If your battery completely fails, some companies will replace it; others will cover the replacement cost once the battery falls below a predetermined charging threshold.
The out-of-pocket cost for a replacement battery for an electric vehicle (EV) that is out of warranty or whose battery is damaged in an accident and not covered by insurance can range from $5,000 to $20,000. The pack, size, and battery manufacturer all have a significant impact on the overall cost.
The good news is that it's anticipated that EV battery prices will drop over time: The price of a lithium-ion battery for an electric vehicle (EV) decreased by 89% between 2008 and 2022, from $1,355/kWh to $153/kWh, according to the Department of Energy. The agency credits increased manufacturing volume and advancements in battery technology for the sharp decline.
A driver's insurance rate may differ depending on personal criteria such as age, gender, credit score, and driving history. The Zip Code has an impact on rates as well; residents in densely congested metropolitan areas pay more than those of more tranquil rural locations. Additionally, they differ throughout states according to laws and rulings made by courts that control insurance providers.
In Michigan, an average MINI Cooper SE insurance policy will cost you approximately $3,079, but in Maine, it will only cost you roughly $905.
The following are the approximate prices for the cheapest EVs to insure annually:
Most car insurance companies will insure an electric vehicle. It's comparable to purchasing insurance for a gasoline-powered vehicle, and you'll be able to get the most common types of car insurance, including liability, collision, and comprehensive coverage. Some insurance firms provide discounts to owners of electric vehicles. Depending on the firm, these may be referred to as an "alternative fuel discount" or a "green car discount." Here are some insurance companies that provide discounts for electric vehicles (availability varies by state):
It safeguards the owner of an electric vehicle against any unexpected incident that could cause damage. Because third-party EV insurance is required, it is preferable to obtain comprehensive electric car insurance for broader coverage.
Full-coverage vehicle insurance means that your policy includes comprehensive, collision, and liability coverage. The insurance company will pay for damage to your car and harm to other vehicles and individuals under this type of policy.
In general, electric vehicles are more costly to insure than conventional automobiles. Because electric cars are often more costly to purchase and repair, insurance companies may charge drivers more for coverage. However, the savings on petrol and tax breaks may more than offset the higher price of your policy.
Like any other car, electric vehicles are covered by insurance. The difference in insurance cost between gas-powered cars and electric vehicles (EVs) is narrowing as EVs become more popular and battery technology advances. Look around, compare multiple policies, and find providers that provide the proper coverage and savings to ensure you receive the best deal on electric vehicle insurance.