Purchasing insurance for an electric car is often an afterthought once the car has been selected and the finance has been locked in. While the overall running costs of an electric car are likely to be substantially lower than a petrol car - insurance costs are an outlier. If you’re a first time EV buyer, you’ll be surprised to know the cost of insuring an electric car is higher than a petrol one - sometimes substantially.
For example, when zecar analysed 2023 Tesla insurance premiums,, we found the national median premium for a 2023 Tesla Model 3 was $2200 per year for full comprehensive insurance. That’s almost 40% higher than the national median cost of car insurance. Expensive car insurance adds to the already high sticker price of an electric car purchase. Here’s everything you need to know.
Why is Electric Car Insurance Expensive?
Buying insurance for an electric car is no different than a petrol car. The same coverage types generally apply to both. So why is electric car insurance more expensive? It is mostly due to costs:
- Price: EVs are more expensive than their petrol counterparts, mainly due to the batteries. The batteries in electric car comprise roughly one third of the total cost of manufacturing. The replacement cost for the battery of a Tesla Model 3 RWD is ~$18,000.
- Specialised parts and repairs: EVs require specialised repair equipment and mechanics. So if you need repairs after an accident, chances are you’ll have to take your electric car to an EV-certified location. Furthermore, as they still relatively new to the market and are sold in smaller volumes, the supply chain for parts is not as well developed, meaning they will likely harder and more expensive to source.
Higher prices and fewer repair options mean higher insurance premiums since insurers will need to fork out more money to repair or replace your electric car if it gets damaged or stolen. Your insurance company may also have to pay more for a rental car since your EV could sit in the shop longer than a petrol car typically would.
How Can I Save Money On Electric Car Insurance?
Many factors in pricing an car insurance policy are outside your control. Still, there are a few things you can do to get a better price:
- Shop around: Car insurance quotes can vary greatly from one company to the next, particularly for electric cars. That’s why shopping around with at least three different companies is often the best way to get a lower price.
- Enquire about discounts: Just like Green EV loans, some insurers might offer a discount for driving an electric car.
- Pay a higher excess: An excess is what you pay upfront before receiving a payout from your insurer after an accident. You’ll typically have the option to increase or decrease the excess on your insurance policy. A higher excess means lower premiums
- Pay as you drive. Consider pay as you drive insurance if you don’t expect to cover much distance in your new EV. With pay as you drive insurance, you pay a monthly base rate plus a per-kilometre rate. This could save you a lot of money if you drive shorter distances. It should be noted that one of the benefits of owning an electric car is the higher savings from driving longer distances.
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