Is Car Insurance Cheaper for Electric Cars?

Is car insurance cheaper for electric cars? Insurance costs on electric cars will vary between different insurance companies, but it is also important to realize that different electric cars are going to be associated with a different amount of risk to these companies. Another factor to consider when it comes to these cars not being on the market for very long is that they also cost more to repair. This can make the cost of insurance for electric cars to be higher than for standard gas vehicles.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Jun 9, 2021

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Ever since electric cars were first introduced into the world auto market, there have been mixed reviews on how these types of cars impact one’s monthly insurance costs.

While some people claim that these cars are a nightmare to insure, the reality is that the insurance rate associated with a car is going to depend on more than just its source of fuel.

Insurance costs on electric cars will vary between different insurance companies, but it is also important to realize that different electric cars are going to be associated with a different amount of risk to these companies. Let’s take a closer look at the risk profile of the electric car market as a whole.

Insurance Companies Only Care About Risk

Are cars like this cheaper to insure? (IMG SRC – FLICKR)

Whether your car is fueled by gas or electricity, the auto insurance companies only care about the risk of serious damage taking place on the car. There are many different factors that go into the risks involved with a certain car.

For example, insurance companies usually charge a higher premium on cars that have more horsepower than your average minivan. A car that has the potential to go fast has a higher risk of being involved in a serious accident because the driver will have the ability to drive at much faster speeds.

The real issue when it comes to electric cars is that car insurance companies are not entirely sure of the risks involved with electric vehicles. These cars have not been on the market for very long in the grand scheme of things, so the companies do not have a lot of data to work with when it comes to how risky a certain type of automobile will be on the road.

Most auto insurance companies are being rather conservative when it comes to insuring electric cars because they simply do not have an exact number on the risk factor involved with these vehicles.

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Higher Repair Costs For Electric Vehicles

Another factor to consider when it comes to these cars not being on the market for very long is that they also cost more to repair. It is much harder for mechanics to find the spare parts that they need to repair electric cars because there is simply not enough of them on the market right now.

Car specialists have been working on gas fueled vehicles for their entire lives, and working on electric vehicles is a completely different animal. This means that the labor involved with repairing an electric vehicle is going to see the same price increase as the parts involved with the repair job.

Additionally, repairing an electric are requires extreme skill and mechanics require additional training in order to ensure they are fixed correctly.

And, while electric cars have less moving parts than traditional gas-powered vehicles, the parts that they do have – their complex battery systems and other high-tech components – are a lot more expensive to repair and/or replace.

Given the high cost of repairing an electric car, it stands to reason that the cost of insuring these vehicles costs more than insuring standard gas-powered cars.

Still, while auto insurance may be higher for an electric vehicle, you can still save money purchasing one compared to a gas-powered car. A great deal depends on the area you live in.

The best cities to own an electric vehicle combine government incentives, charging stations, and low electricity costs to offset the higher cost you may see with auto insurance coverage.

What Insurance Coverage is Recommended for Electric Cars?

The insurance coverage that is recommended for electric cars is equivalent to the insurance coverage that is recommended for gas-powered vehicles. This, of course, includes liability coverage.

In order to register and legally operate your electric car, you will have to carry, at the very least, liability insurance, and the limits will have to meet the requirements set by your state. To find out the required liability limits for your electric vehicle, check with your state’s Department of Motor Vehicles.

Other types of auto insurance coverage that are recommended for electric vehicles include:

  • Collision insurance. With this coverage, your insurance carrier will help to pay for the cost of damages that your vehicle sustains when it is involved in car accident, no matter who is responsible for the accident. For example, if you rear-end another vehicle, if you carry collision coverage, the repairs to your vehicle will be covered by your insurance provider. While collision coverage is not a legal requirement, if you are leasing or financing your electric vehicle, it’s likely that your lender will require you to carry this type of insurance. But, even if you own your vehicle outright, it’s still a wise idea to carry collision coverage, given the high cost of repairing an electric vehicle.
  • Comprehensive insurance. With this type of coverage, your insurance provider will pay to repair or replace your electric car if it damaged by anything other than a collision. For example, if a tree limb falls on top of your car, an animal runs into it, or a hail storm dents the hood and roof, comprehensive coverage will pay for the repairs. Again, this type of insurance is not required; however, given the high cost of repairing an electric car, it is highly recommended.

It Still Depends on the Individual Car

At the end of the day, insurance companies do not put all electric vehicles in the same basket. The real reason that insurance costs on some of them are going to be so expensive is that some of these vehicles are rather small and unstable.

The difference in insurance costs between a car from ForTwo and one from Tesla is going to be rather massive. The Tesla Model S recently garnered the most positive safety rating of all time, so these cars are obviously going to come with lower insurance rates than a dinky two-seater from ForTwo.

Which Electric Cars are the Cheapest to Insure?

As the demand for electric vehicles continues to grow, a number of manufacturers are heeding the call. In fact, some of the most highly regarded makers of gas-powered cars are not producing electric cars.

With that said, some electric cars are less expensive to insure than others. Mercury Insurance put together a list of the top 10 electric cars that are the most affordable to insure. They are listed below, starting with the least expensive make and model:

  1. 500e by Fiat
  2. Soul EV from Kia
  3. Leaf by Nissan
  4. e-Golf by Volkswagen
  5. Smart For Two Electric Drive
  6. I-MiEV by Mitsubishi
  7. Ford’s Electric Focus
  8. IONIQ Electric by Hyundai
  9. BMWs i3
  10. Tesla’s Model 3

The cost of insuring these 10 electric vehicles is based on a 30-year-old male driver from Newport Beach, California who has a clean driving record and drives an estimated 13,000 miles each year. The cost of coverage included $100,000 liability limits per person and $300,000 per accident, as well as $50,000 worth of coverage in property damages.

Of course, rates do vary from insurance provider do insurance provider; however, the quotes offered for insuring electric cars on are some of the most affordable you will find. We work with the most reputable insurance carriers that charge fair prices and will offer you the least expensive rates possible.

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