What You Need To Know About Insuring an Electric Car

Does electric car insurance cost more?

A man in sunglasses and a bright hawaiian shirt charges his electric car

Thomas Barwick/Getty Images

Electric vehicle sales are surging as car buyers look to save on fuel and maintenance costs and contribute to a greener planet. The International Energy Agency’s (IEA) most recent report shows a 40% year-on-year increase in electric car sales, with a record-breaking 2.1 million global sales in 2019. The world has gone from having around 17,000 electric cars on the road in 2010 to 7.2 million in 2019. 

Most prospective buyers know that electric vehicles have higher upfront costs in exchange for greater fuel efficiency and lower environmental impact. But what some people don’t know is how having an electric car can affect the cost of car insurance. To help you avoid surprises when it’s time to update your policy after making the switch, let’s look at the ins and outs of insuring electric vehicles. 

Does It Cost More To Insure Electric Cars?

Insurers have yet to conclude that owning an electric car presents a greater liability risk than a gas-fueled one. Electric cars also don’t require special coverage, and policies resemble those issued for traditional vehicles.

But drivers of electric cars do tend to pay more in premiums, about $442 more per year by some estimates. The difference is likely because electric cars are generally more expensive than their conventional counterparts. You can still maintain the same liability limits on your policy when insuring an electric car, but collision and comprehensive insurance (which cover damage to your vehicle) can cost more because of the car’s higher price tag. Collision insurance can also cost more because electric and hybrid cars may need factory-authorized repairs after an accident due to their unique parts.

As more crash data is gathered on electric cars, insurance companies may come to see them as being higher risk. A report from the U.S. Department of Transportation’s National Highway Traffic Safety Administration research showed that rates of pedestrian collisions with hybrid cars were 1.2 times higher than with conventional vehicles, potentially due to the quietness of electric vehicles. Minimum sound requirements for hybrid and electric vehicles were enacted in 2018 to help prevent these collisions.

Typical Costs of Electric Car Insurance

To give you an idea of what you could expect to pay, we requested quotes from the two largest private-passenger auto insurers for a six-month policy on three electric cars (affordable, mid-range, and luxury). Here’s what we found:

Vehicle MSRP State Farm GEICO
2020 Nissan Leaf $31,600 $1,398 $1,389
2020 BMW i3 $44,450 $1,703 $1,504
2020 Tesla Model X Long Range $89,190 $2,053 $2,896

To level the playing field, we removed any discounts given to our driver. It’s essential to shop around for car insurance, as discounts have a powerful impact on your bottom-line price. For example, GEICO extended significantly more discounts as part of our quote, and its discounted premiums were less than half of State Farm’s for the Nissan and the BMW. 

We requested the quotes using a sample profile of a 35-year-old female driver in Minnesota who was on the road 12,000 miles per year and had a clean driving record. We selected coverage to meet the state’s minimum insurance requirements, and included comprehensive and collision coverages with $500 deductibles. MSRP values are from the Kelley Blue Book. 

Where To Get Insurance for an Electric Car

Most insurance companies that cover conventional vehicles also insure electric and hybrid vehicles, including standard carriers like State Farm, GEICO, Allstate, Liberty Mutual, and Farmers. Tesla also offers insurance for its vehicles in California, and plans to expand to additional states.

Installing a car charging station in your driveway or garage may affect your home insurance policy. Some state laws require home and condo owners to have liability coverage for the charging equipment, and some underwriters may want to see photos or documents that show the unit was installed correctly. Be sure to talk to your home insurance agent about any requirements before adding a charging station to your home. 

Offsetting the Costs of an Electric Vehicle

Consumer Reports found that electric-car drivers save an average of $800 to $1,000 per year on fuel when charging at home and $4,600 on lifetime vehicle maintenance and repair, compared with conventional car owners. Newer long-range electric vehicles were also shown to hold their value better than gas-powered ones. The U.S. Department of Energy offers a useful comparison tool that shows how much you could save on fuel by switching.

And electric vehicle owners can enjoy even more savings. In addition to typical insurer discounts for having multiple policies and being claims-free, your electric car’s safety technology (like a collision-avoidance system and automatic braking) can translate into extra discounts. 

You may also qualify for a federal tax credit of up to $7,500 when you buy a new electric or hybrid vehicle. Tesla and GM owners aren’t eligible for this tax credit, but a new bill may change that if it passes. Several states also offer incentives. California residents can receive rebates of up to $7,000 on their purchase or lease of a new electric vehicle via the California Clean Vehicle Rebate Project and up to $1,500 via the California Clean Fuel Reward.

Local municipalities like the Sacramento Metro Air District give owners of zero- or near-zero-emission cars up to $9,500. Other cities like Cincinnati, Ohio, and Santa Monica and Hermosa Beach, California, provide perks like free parking. Tesla shares a helpful list of federal, state, local, and utility incentives for electric vehicles on its website. 

The Bottom Line

Insurance coverage for an electric car may cost more than it would for a gas-powered vehicle, but not for the reasons you’d expect. Electric vehicles tend to be pricier than conventional ones, so they cost more to repair and replace. But comparing car insurance quotes and taking advantage of discounts and incentives can significantly lower the overall cost of ownership for electric cars, especially when you factor in the potential lifetime fuel, maintenance, and repair savings.