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As electric vehicles become more common in America, what changes will consumers and auto insurers face?
Car Insurance For Electric Vehicles
Author: Daniel Robinson Author: Daniel Robinson Writer Daniel is a writer for the Guides Group and has written for a number of automotive news sites and marketing firms in the US, UK and Australia, specializing in auto finance and car care topics. Daniel is the Guides Group authority on auto insurance, loans, warranty options, auto services and more.
Find The Best Electric Vehicle Car Insurance Quotes
Edited by: Rashaun Mitchner Edited by: Rashaun Mitchner Managing Editor Rashaun Mitchner is the editor of a team of guides with over 10 years of experience covering personal finance and insurance topics.
This feature is part of an ongoing series called “The Future of Auto Insurance,” which identifies emerging topics and trends in auto insurance. Read the next part of our series on AI in auto insurance.
We are officially living in the electric vehicle (EV) era. Global sales of electric vehicles will exceed 10 million in 2022, and the International Energy Agency (IEA) predicts this number will nearly quadruple by 2030. – and this number will continue to grow.
The rise in popularity of EVs will have a wide impact on various sectors of the automotive industry. So what does this rapid growth in EV sales mean for auto insurance? In this article, the Guides team examines the rise of the EV and what it means for both consumers and car insurance companies.
The Best Insurance For Electric Cars
10 Factors That Affect Car Insurance Prices Average Car Insurance Prices Top Car Insurance Companies 10 Largest Car Insurance Companies in America
Electric cars have a wide range of advantages for consumers beyond lower fuel costs: their engine parts break down less often, they don’t require oil changes, and they typically rely on their own braking systems. They’re simpler than their gas-powered counterparts. However, electric vehicles also come with higher prices and therefore more expensive to insure than conventional combustion engine vehicles.
In addition to being more expensive to run on electricity than most conventional cars, they are also more expensive to repair and replace. According to Kelly Blue Book, these are the two main reasons why consumers see higher car insurance premiums for EVs.
In March 2023, the average price of a new electric car reached $58,940. That’s $10,000 more than the industry average new car price of $48,008. Because the MSRP of the car is directly affected. The cost of car insurance, EV owners are bound to see higher prices for coverage.
Car Insurance For Electric Cars
High repair costs also play an important role in determining EV insurance premiums. Although electric vehicles have fewer parts that are prone to failure, the parts that need to be repaired or replaced are more expensive. This is especially true if the EV’s battery is damaged. Consumer Affairs found that the average cost of replacing an EV battery is about $4,500 to $18,000.
Electric vehicle owners also face a shortage of qualified repair shops and technicians. The specialized training required to repair electric vehicles means fewer options available to consumers when a repair is needed, and a higher bill. All of these factors increase the cost of insurance for EV drivers.
As electric vehicles become more common and represent more vehicles on the road, maintenance costs and MSRPs will drop – and insurance costs will follow. However, in the near future, you can expect to pay more for EV insurance than standard car coverage costs.
We caught up with Nick Vitali, a licensed insurance agent with more than 14 years of experience specializing in personal lines insurance, to find out just how much electric vehicles are affecting consumers. While he agrees that higher repair costs will continue to drive up insurance premiums, Vitali noted that it’s not all bad news for EV drivers. “Some insurance companies actually offer discounts or incentives for EV owners because they are more environmentally friendly and less likely to be involved in fires,” he said.
Average Cost Of Electric Car Insurance Uk 2023
For additional context, we reviewed RepairPal’s estimate of annual repair costs. The table below shows the annual maintenance costs of popular EV models, as well as gas-powered and hybrid alternatives:
As you can see, repair costs for electric vehicles are high, but the cost can vary depending on factors such as the make and model of the vehicle.
To learn more about EV insurance costs and how they compare to gas-powered vehicles, we’ve compiled annual premium prices from Quadrant Information Services. The averages in the table below are for 35-year-old drivers with good credit and a clean driving record. They represent the expected costs for comprehensive car insurance policies, which include minimum liability insurance as well as collision and comprehensive coverage.
Electric cars tend to be more expensive when it comes to the average cost of insurance, but this varies depending on the make, model and year of the car. In 2023, the national average cost of car insurance will be $2,024 per year. The cost of supplying electric vehicles on this list ranges from 10% to 135% higher than the national average.
Electric Car Drivers Face Insurance Chaos As Costs Soar Over £5k
Not paying for gas or oil changes can help EV drivers save on traditional car ownership costs, but they can offset higher insurance costs by taking advantage of local, state and federal rebate programs.
At the state level, for example, Colorado offers up to $8,000 in rebates to residents who purchase or lease an electric vehicle, while California offers more than $30,000 in rebates to low-income residents as incentives to purchase a new EV. . In many states, utility companies offer rebates and incentives to customers who install EV charging systems in their homes.
Federal tax credits are also available for owning certain EV makes and models. The Inflation Reduction Act of 2022 offers a tax credit of up to $7,500 for those who purchase a qualifying EV with a battery capacity of at least seven kilowatt hours. This loan was extended until December 2032.
In addition to credits and rebates, taking advantage of auto insurance discounts available through your insurer is a great way to save. Most major insurance companies offer savings options for safe drivers, policyholders who insure more than one vehicle, and those who combine auto coverage with another policy. Choosing a higher deductible may also result in lower premiums, but it means the driver is responsible for out-of-pocket expenses if repairs are needed.
Electric Vehicles The Next Breakthrough For Usage Based Insurance?
As we see some fluctuations in EV insurance costs in the coming years, it will be more important than ever to compare car insurance quotes from multiple providers. This is one of the best ways for EV drivers to find quality, affordable coverage that fits their situational needs.
The rapid growth of electric vehicles is driving changes among car insurance providers, and further adjustments will inevitably follow. “Insurance companies must consider the unique characteristics of EVs in their underwriting models and risk assessments,” Vitaly said.
Perhaps the most obvious change that EVs will bring to insurers is the cost of collision coverage. This type of insurance pays for damages to your vehicle when you are involved in an accident.
Replacement parts and repairs are more expensive for EVs than conventional gas-powered vehicles. As mentioned earlier, the situation becomes even more complicated if the electric vehicle battery is damaged in an accident. Insurers must manage this risk with higher collision coverage rates for EVs.
Do Electric Vehicles Cost More To Insure? How Much More?
Charging an electric car at home takes another level up for insurance companies. There are two main levels of home charging for EVs:
Level 1 charging requires no additional modifications at home and is a simple charging option. Although Level 2 home charging setups typically involve installing a new 240V outlet, insurers do not require EV owners to purchase additional homeowners insurance. However, some insurance companies may require proof that the home charging unit is properly installed.
Auto insurance providers will have to make some changes to the way they do business as EVs grow in popularity. This is especially true when it comes to claims. As Vitali says, “Insurers can provide special training to their employees to handle all EV-related requirements.”
We also have a good chance of seeing new types of car insurance policies become available to meet the specific needs of emerging EVs. According to Vitali, “As the EV market continues to grow, insurance companies may come up with new policies or expand coverage options specifically for EV owners to keep up with the ever-changing trends in the electric vehicle industry.”
Bought An Ev? Now Protect The Ev With Electric Vehicle Insurance
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