Is Electric Car Insurance More Expensive?

Electric vehicles (EVs) have become increasingly popular, with sales rising by 35% in 2023 according to the International Energy Agency (IEA). Despite their growing appeal and benefits, insuring an EV is generally more expensive than insuring a gas-powered car. The National Association of Insurance Commissioners (NAIC) reports that EV insurance premiums are, on average, $44 more per month than those for gas-powered vehicles.

Why Does Electric Car Insurance Cost More?

Several factors contribute to the higher cost of electric car insurance:

• Higher Price: The average new EV sold for $55,353 in January 2024, compared to $47,401 for the average new car across all categories. This higher cost of replacement leads to higher insurance premiums.
• Repair Costs: While EVs may require less maintenance, significant repairs, especially battery replacements, can be costly. EV batteries can range from $6,500 to $20,000, and fewer repair shops have the necessary equipment and expertise.
• Shortage in Repair Resources: The rising popularity of EVs has increased the demand for replacement parts and qualified labor, but the availability of these resources is still catching up.

Benefits of Electric Cars

Despite the higher insurance costs, electric cars offer numerous benefits:

• Less Emissions: EVs emit less tailpipe emissions than gas-powered vehicles, reducing your environmental impact.
• Fuel Savings: The cost of electricity needed to operate an EV is generally lower than the cost of gas, thanks to higher energy efficiency.
• Lower Maintenance Costs: Electric motors are less mechanically complex, eliminating the need for regular oil changes and other routine maintenance tasks.
• Tax Credits: You may be eligible for federal tax credits of up to $7,500 for new EVs or up to $4,000 for pre-owned vehicles. Check your state’s laws for additional incentives.
• Access to Reserved Lanes and Parking: Many cities allow EVs to use high-occupancy vehicle (HOV) lanes and park in reserved spots.

How to Save on Electric Car Insurance

Although EV insurance is typically more expensive, there are ways to lower your costs:

Shop and Compare Insurers

Get at least three price quotes from different auto insurers, including your current one. Ensure you compare similar coverage options to make an informed decision. Switching to a provider with a lower rate can result in significant savings.

Take Advantage of Discounts

Many insurance companies offer discounts to EV drivers. Contact your insurer to see if they offer alternative fuel or green discounts. You may also qualify for other discounts by bundling home and auto policies, insuring multiple vehicles, or taking a defensive driving course.

Raise Your Deductible

Increasing your deductible can lower your premiums since you take on more financial risk. However, ensure the deductible is not so high that it would strain your finances if you need to file a claim.

Consider Reducing Coverage

If your car is paid off and you can afford to repair or replace it out of pocket, consider dropping collision and comprehensive coverage. This is especially relevant for older cars worth less than a few thousand dollars.

Keep a Clean Driving Record

Maintaining a driving record free of accidents and traffic tickets can result in a lower risk score and, consequently, lower premiums.

Contact O1ne Mortgage for Your Mortgage Needs

At O1ne Mortgage, we are committed to helping you with all your mortgage needs. Whether you’re looking to buy a new home or refinance your current mortgage, our team of experts is here to assist you. Call us today at 213-732-3074 to learn more about our services and how we can help you achieve your financial goals.