Car Insurance Is More Expensive for Electric Cars
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While that’s certainly cool, and a great way to save at the pump (because you don’t have to go to the pump), the car insurance coverage might not as cheap as you had hoped.
In fact, you may have been expecting a discount for having an electric car as opposed to a gas-guzzler.
After all, there are specific discounts for things like hybrid vehicles or cars that use alternative fuel.
So if your car runs on electricity as opposed to gas, some sort of hybrid, or a different alternative fuel such as ethanol or compressed natural gas, your auto insurer may give you a 5-10% discount.
But here’s the problem; many if not all electric vehicles cost more than their counterparts, thereby making them more expensive to insure, even if you get a discount for driving one.
Remember, as we’ve noted in the past, it doesn’t matter how many discounts you receive. Only the final price matters. Why do you think all those high-priced stores constantly throw 20% off coupons your way?
They know their prices are already way too high and basically price in that discount via a markup, so if you don’t use the coupon, you’re getting truly ripped off. And if you do use the coupon, you’re probably just getting slightly less ripped off.
Electric Vehicles Cost 21% More to Insure
Anyway, a recent study conducted by NerdWallet found that electric cars cost on average roughly 21% more to insure than gas powered vehicles.
The numbers are based on annual car insurance quotes for California drivers with the following coverage options:
Pretty standard auto insurance policy there, which on average set a driver back $1,620 for a gas vehicle and $1,955 for the electric version of said vehicle.
As you can see, they compared four models that have both a gas version and a corresponding electric version.
In every instance the gas version was significantly cheaper, in one case as much as 26% cheaper. That meant the gas driver would save more than $400 annually on car insurance.
Why Do Electric Cars Cost More to Insure?
It’s pretty simple really. The reason electric vehicles cost more to insure is because they’re generally more expensive than their gas-powered cousins.
If a car is more expensive, it will cost more to insure because the insurance company will have to pay more for repairs, or to replace it if it’s stolen.
Also keep in mind that these electric vehicles have complicated components like high-priced batteries, and a special technician may be required to fix the thing.
This means the car can’t just be taken to the insurer’s preferred body shop if it’s outside their scope of knowledge.
Assuming you still want to purchase an electric car, expect rates to be pretty constant from insurer to insurer regardless of how it’s powered.
For example, the study found that Mercury was the cheapest for all the electric cars in the study. Mercury also tends to be the cheapest for fossil fuel powered cars too.
As noted, while some auto insurance companies may offer a discount for electric or hybrid cars, the lowest price will probably still come from the company that insured your gas-powered vehicle.
But be sure to shop around to see if there are any specials for electric vehicles that push the price down any lower, and don’t hesitate to ask about any applicable discounts.
Read more: How are car insurance rates determined?