I buy an electric vehicle: how does it affect my car insurance? – Councilor Forbes
Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but this does not affect the opinions or ratings of our editors.
This will be a record year for electric cars. Electric vehicles (EVs) are set to set a sales record, according to a new report from the International Energy Agency. Interest in electric vehicles is booming. According to analytics firm SEMRush, there was an 18% growth in searches for the term “hybrid” and a 20% increase in searches for “electric vehicle” in the first six months of this year, compared to at the same time last year.
If you are thinking of buying an electric car, you may not have given much thought to car insurance.
But Elon Musk did it. He wants to use Teslas telematics data to build a new insurance operation. Musk recently announced his plans on an earnings call with investors. And that has left some drivers wondering how auto insurance for an electric vehicle could be any different from that of a gasoline car.
If you own an electric vehicle, your insurance will likely look a lot like that of a gasoline vehicle, with a few notable differences. You will probably pay a little more to insure an EV. This is because it usually costs more to repair an EV than a conventional car. But the increased cost of insuring an EV could be offset by tax credits (depending on the vehicle you buy).
Here’s what you need to know about electric vehicles and auto insurance.
Electric vehicle insurance costs
This is what Daniel Carter found out when he tried to purchase insurance for his electric car.
“The only difference is that insuring an electric car is more expensive than that of a conventional car,” says Carter, who founded Zippy Electrics, a gadget review site. “The reason is that electric cars are much more expensive and easier to damage than a gasoline car. “
But that doesn’t necessarily mean you’ll pay more for your auto insurance. Your total price can be offset by an insurance discount for an electric vehicle.
Generally, the more it costs to repair or replace a car for a problem like an accident, fire or theft, the more expensive it is to insure. But insurance costs will vary based on other cost factors, like your driving history, age, and location. If you have a clean driving record with no at-fault accidents or traffic violations, you will usually pay less than those with a checkered driving record.
So how much does it cost to insure a car?
Nationally, the average cost of full coverage auto insurance is $ 1,134, according to the most recent report from the National Association of Insurance Commissioners. This includes responsibility, collision and comprehensive insurance.
Your EV will play a role when your insurer sets your rates, so it’s a good idea to compare quotes from multiple auto insurance companies before buying a policy. You can find quote comparison tools online to get an idea of the cost of insuring an EV in your area.
Some electric vehicle owners find the auto insurance experience to be about the same as insuring a traditional gasoline car. At least that’s what Laura Sinton, owner of a small business in Coronado, Calif., Found out.
“Our auto insurance is the same price as gasoline engines,” she says. Sinton recently traded in a Toyota Prius for a Chevrolet Bolt and saw only a slight increase in his premiums.
Regardless of your vehicle type, it’s a good idea to shop around and compare insurance costs before purchasing a policy.
Electric vehicle repair costs likely to be the driving factor in insurance costs
Electric vehicles are more efficient and have fewer moving parts than non-electric cars, says Charlie Wendland, claims manager at Branch. “The problem with the claims side is that when one of these parts is damaged in an accident, the entire part, which can perform five different functions, now needs to be replaced, increasing the overall cost of the claim. “
It’s actually a bit more complicated, as I found out when I recently bought a Tesla Model X. I didn’t want to pay $ 79,990 for a new car, so I started looking for a Model X. second hand. I was surprised to find that a low mileage 2019 Model X was significantly cheaper than a new one – $ 50,000 or less if you looked hard enough.
It turns out that the really inexpensive Model Xs were vehicles that had been damaged. I’ve learned that when an EV is involved in a car accident, the insurance company is more likely to report it total than a traditional gasoline car. Even small bumps can be costly, as Wendland noted.
These “totaled” cars are then auctioned off to companies specializing in the repair and resale of electric vehicles. But the high cost has to do with the time it takes to find someone who can fix the vehicle and who has the expertise. If you have the right skills, you can repair a total electric vehicle and sell it for lower market prices and again make profit.
Wendland says the higher costs are also related to the novelty of the technology. “The spare parts and used parts chains are still under development,” he explains. “This leaves carriers with no alternative but to replace damaged parts with original equipment, another cost factor. “
Let’s talk about batteries
When it comes to auto insurance, many of the factors that determine rates are the same for electric vehicles as they are for gasoline vehicles. Vehicle type, model year, vehicle weight and engine size all come into the equation, according to Jim Sutton, automotive product manager at Farmers Insurance.
“Once these fundamental variables are compared, additional differentiators, like whether it’s an electric vehicle or a hybrid, are taken into account,” he says.
And the biggest differentiator? Batteries.
“When there are claims involving an electric or hybrid vehicle, claims adjusters and body repair shops will generally look for possible damage to the vehicle’s battery,” he adds. Damaged or leaking batteries can often require additional safety precautions, which can increase repair costs.
“The cost of these batteries is quite significant if they are damaged in a loss,” says Sheree Clow, auto claims manager at Country Financial. “However, studies show that the cost is falling rapidly.”
This means that repair costs also decrease. And that will ultimately translate into lower premiums for electric vehicles.
Find repair shops
When it comes to filing an auto insurance claim, the experience is the same whether you have an electric, hybrid, or conventional car, says Eric Vaden, owner of Geico Boston-South Shore.
“The only difference may lie in the availability of repair shops equipped for electric vehicles,” he notes. “Although, as electric vehicles gain in popularity, there are a growing number of repair shops that can help fix them.”
Insurance for the EV driver
Whether Musk can launch a new telematics-based auto insurance company remains to be seen. In the meantime, here are some insurers that offer discounts on electric vehicle insurance (availability may vary by state):