Do electric cars cost more to insure?

Why do electric cars tend to cost more to insure?

Historically, insurance rates for EVs have been higher than ICE vehicles because they can be more expensive to repair and replace. Replacement battery packs, for example, can be pricey. MotorTrend reports that a 75-kwh Tesla battery pack costs $5,999 while a 100-kwh pack costs as much as $15,500. It can also be difficult to assess battery damage after an accident, leading some EVs to be totaled even after relatively minor crashes, which can drive insurance rates up. There are also fewer technicians trained to fix EVs, and those repair shops with EV experience may charge more for repairs.

However, it's possible that some EV models may have insurance costs that are closer to an equivalent ICE vehicle. A 2023 study (made available to member insurers) from the Insurance Institute for Highway Safety-Highway Loss Data Institute (IIHS-HLDI) compared the frequency of insurance claims between EVs and their ICE counterparts (for example, an electric Mini Cooper versus a gas Mini Cooper). The EV models had significantly fewer claims for property damage and collision than the ICE vehicles (though more expensive property damage claims), as well as fewer claims for bodily injury and PIP/MedPay. This suggests that certain makes and models of EVs may have similar insurance costs as a comparable ICE vehicle.

Important note: The make and model of your car is only one factor that influences your insurance rate. Your age, location, coverage selections, and more all influence the price you pay for coverage. Learn more about what impacts your auto insurance rate.

Why do electric cars cost more?

The average price of an EV is higher than an ICE vehicle due to a few factors, including:

• More expensive parts: Besides battery packs, EVs tend to have more bells and whistles, in addition to specialized components, which adds to their price tag.
• Most are luxury vehicles: While more affordable EVs have hit the market in recent years, most EVs are priced as luxury vehicles, leading to higher average prices compared to ICE vehicles.
• Economies of scale: ICE vehicles have been mass-produced for over 100 years, leading to significant cost savings through economies of scale (i.e., the more of something you make, the cheaper it is to produce). In comparison, EVs have only recently seen mass production (and in much smaller quantities), so they have a long way to go to match the scale and efficiency of ICE production.

With that said, battery prices are coming down. One trend helping drive down battery costs is the auto industry's shift toward LFP (lithium iron phosphate) batteries, which are cheaper to make than conventional lithium-ion batteries. Over time, large-scale production and cheaper batteries should result in even more affordable EVs rolling off the assembly line.

Do insurance companies give out discounts for electric vehicles?

Insurance discounts for electric vehicles vary by insurer. To find out which car insurance discounts you might qualify for, ask about them when you get a quote for auto insurance. While Progressive doesn't offer a discount specific to electric vehicles, our car insurance customers earn an average of seven discounts.

Are there ways to reduce electric car insurance costs?

You may qualify for cheaper car insurance by maintaining a clean driving record and using other strategies to lower your car insurance. Your age and location also impact your car insurance premium. Learn more about the factors that impact car insurance costs.

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