Understanding Electric Car Insurance
The National Renewable Energy Laboratory projects that by 2030, there may be between 30 million to 42 million electric vehicles (EVs) in the U.S. If you’ve already jumped on the EV bandwagon, car insurance may be top of mind. While it can be more difficult to find an affordable auto policy for your EV, it’s not impossible.
By becoming familiar with EV insurance options and understanding how they differ from policies for traditional gas-powered cars, you can make the most informed decision for your EV. Below, you’ll find everything you need to know about electric car insurance. If you're not sure yet about EVs, comparing options from our best car insurance providers can help you find affordable protection tailored to your needs.
Key Insights
- EV insurance costs more due to pricey parts, skilled labor, and higher claim payouts.
- Standard auto coverage applies to EVs, but extra protection like gap or collision is wise.
- Compare quotes, bundle policies, and seek EV discounts to lower premiums.
- EV owners may earn tax credits and energy incentives, offsetting higher insurance costs.
Why Electric Cars May Cost More to Insure
While EVs offer a great deal of benefits, such as improved fuel economy and reduced emissions, they’re more expensive to insure than gas-powered vehicles. In fact, the National Association of Insurance Commissioners (NAIC) found that auto insurance for EVs may be up to $44 more per month. Here’s why:
Higher Costs: Compared to a gas-powered car, an EV’s original price is higher. In general, more expensive vehicles come with higher car insurance rates. Of course, a higher-end EV like a Tesla will cost more to insure than a more affordable option like the Chevy Equinox EV.
Expensive Parts: EVs can be expensive to repair and replace due to their highly specialized features. “The battery in an EV is extremely expensive, and it’s prone to irreparable damage even in minor accidents,” explains Melanie Musson,a car insurance expert with CarInsurance.org. Also, EV parts are typically from the original manufacturer, further increasing the price.
Specialized Technicians: It takes a great deal of skill and experience to repair an EV model. As a result, repair shops charge more for labor, which leads to higher repair costs.
More Claims: Car insurers have found that those with EV vehicles tend to file more claims than drivers with traditional, gas-powered models. Therefore, it’s no surprise they charge more for auto insurance.
Higher Claim Payouts: The more expensive parts and labor involved in EV repairs lead to higher claim amounts. Higher claim costs mean more risk for insurance companies and higher premiums for policyholders.
Coverage Options for Electric Vehicles
“Electric car insurance is standard car insurance,” reassures Musson. Contrary to popular belief, most EVs don’t need specialized coverage. If you drive an EV, you can buy the same type of policy you would need if you had a gas-powered car.
While you’ll need to ensure your car insurance meets the minimum requirements in your state, you might also want to add-on optional plans, such as collision coverage, comprehensive coverage, gap insurance, and rental car reimbursement. Additional coverage is usually well worth the investment as accidents with EVs may result in sky-high out-of-pocket expenses. It can give you greater peace of mind.
If you own a Tesla, you may have access to Tesla-specific insurance, depending on where you live.
“Tesla offers access to Tesla-specific insurance for drivers in some states. The policies are tailored to the specifics of Tesla electric vehicles. They’re able to offer lower rates than competing insurers because they intimately know the risks and benefits of Teslas,” says Musson. For more information on Tesla car insurance, reach out to the automaker directly or check out the Tesla mobile app.
Tips for Reducing Electric Car Insurance Costs
Although EV car insurance doesn’t come cheap, some strategies can help you secure a great deal on coverage, such as:
Shop Around: Don’t go with the first auto insurer you find. Compare EV car insurance quotes from multiple companies to zero in on the most affordable plan for your particular needs. Look into rates, coverage options, financial strength ratings, and customer service for each insurer. Make sure you understand the different types of car insurance.
Drive Safely: Make it a priority to follow all road rules and avoid distractions while cruising around in your EV. “You’ll get the lowest rates when you have no accidents or tickets on your record,” said Musson. Though if you did have an accident, don't panic.
Bundle: If you need another insurance policy, such as home insurance, buying your auto policy from the same insurer might save you money. Most auto insurance companies offer bundling discounts.
Explore EV-Specific Discounts: In recent years, it’s become more common for insurers to offer electric vehicle or hybrid car discounts. Look for car insurance companies who provide them. You may also want to ask insurers about these discounts directly since they’re not always advertised.
Take a Defensive Driving Course: Some car insurance companies offer discounts to drivers who complete an approved defensive driving course. As an added bonus, these courses can help you brush up on your driving skills and avoid accidents that can lead to higher rates.
Work with an Independent Agent: An independent agent can help you find a great deal on EV car insurance from a reputable insurer. They may shop around and compare options for you, typically for no extra fee.
Benefits of Insuring an Electric Vehicle
The most obvious benefit of owning an EV is reduced fuel costs and emissions. However, you may also qualify for discounts and other incentives on a local, state, and federal level. You might score a tax credit if you buy an EV with a certain make or model. As of 2025, the IRS offers a federal tax credit of $7500 if you buy a new, qualified plug-in electric vehicle or fuel cell electric vehicle.
Also, your energy company might offer you lower rates so don’t hesitate to ask. In addition, while EVs usually cost more to repair than their gas-powered counterparts, they often require less maintenance, which is a huge plus if you plan to drive your EV for the long haul.
FAQs
1. Why do electric cars cost more to insure?
Higher repair costs due to specialized parts and labor lead to more expensive car insurance rates for EVs. Fortunately, you can still lock in affordable coverage if you shop around, explore discounts, and drive safely.
2. Are hybrids more expensive to insure?
Yes, hybrid models usually come with higher premiums for auto insurance. This is due to their advanced yet costly technology and parts.
3. Do insurance companies give out discounts for electric or hybrid vehicles?
Yes, some car insurers reward EV drivers with special discounts. Since they might not be advertised, it’s a good idea to ask your insurance company or insurance agent about them directly.
