Auto Insurance Considerations for Electric Vehicles

There are many reasons to buy an electric car.  From the environmental reasons to saving money at the gas tank, electric cars are becoming an increasingly popular option on the market. One thing that people might not think about prior to buying an electric car, however, is how much insurance on such a vehicle will cost.  While there isn’t a complete consensus out there, some evidence might suggest that electric cars are more expensive to insure than their non-electric counterparts.  On the other hand, some suggest that it’s still depends on the specifics of the individual car —what’s the engine size? Is it considered a fast and therefore, a more “reckless” vehicle? How high is the price tag? Is it a more expensive vehicle?

Is insurance higher for electric cars in general?  Here are some reasons why it could be:

1) Higher repair costs 

If a vehicle is more expensive to repair, then your auto insurance coverage is going to be more expensive. A BMW with expensive parts is going to have a higher insurance premium than a Honda Civic that uses cheaper parts.  Most electric vehicles will tend to fall closer to the part costs of a BMW than a Honda Civic, so insurance premiums will likely be higher.

2) Higher price tag

Electric cars tend to be more expensive in general than their non-electric counterparts.  For example, a new 2017 Fiat 500 might cost you around $15,000, while the electric version of the car, the 2017 Fiat 500e, is going to cost you twice that around $30,000.  So, insuring the electric version of this car is going to cost you more than the non-electric version, simply because the price tag is doubled.  As the price tags of electric cars drop, so will the cost of insurance.

3) Smaller cars tend to be more damaged in accidents than larger cars 

Of course, not every electric vehicle is a small car, but a lot of them are.  For these cars, an insurance company might consider the size as more “risky” when it comes to the cost of repairs after an accident.  In their minds, a small electric car might get a lot more banged up and thus require more money in repairs than a larger vehicle.  This is certainly not a blanket factor for all-electric cars, particularly now that we’re seeing a lot of larger electric models coming to the market.

Overall, are electric cars more expensive to insure than non-electric cars? While the evidence might suggest that it is, it still simply boils down to the individual cars.  As long as electric vehicles cost more to buy and to repair than non-electric vehicles, they are going to cost more to insure.  Of course, with electric vehicles, you’ll see a lot of savings at the gas tank and other financial and environmental benefits, so the higher insurance rates might not be problematic and might “pay for itself” with these other extra savings.

Just shop around all of the insurance companies and be sure to check out the discounts they offer to find the coverage that is right for your electric vehicle.

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