Electric Cars: Cheaper Insurance?

Electric vehicles (EVs) are becoming increasingly popular, but are they cheaper to insure than their petrol or diesel counterparts? The answer is not straightforward, as it depends on various factors. While some sources claim that electric cars are now cheaper to insure, others argue that they can be more expensive due to the high cost of specialist parts and repairs. However, the gap in insurance costs between electric and conventional cars appears to be narrowing as more insurers enter the EV market.

Electric cars are now cheaper to insure than petrol/diesel cars

Electric cars are now cheaper to insure than their petrol and diesel counterparts. This is according to an analysis of the electric vehicle market by heycar, which found that electric vehicle owners are increasingly getting favourable results.

The tipping point

For electric car drivers, 2020 marked a tipping point as data from two of the largest price comparison sites showed that electric vehicles are now consistently cheaper to insure than comparable petrol and diesel cars.

The numbers

According to the Association of British Insurers (ABI), premiums for electric cars fell in 2020 because more insurers are entering the market to accommodate the growing number of electric vehicles on the UK’s roads.

Industry data from the Society of Motor Manufacturers & Traders (SMMT) shows a significant increase in the number of new electric vehicles being sold in the UK, with a year-on-year increase of 186% in 2020.

The savings

The average premium for electric cars over the past year is £629, compared to £718 for petrol and diesel cars, according to data from Compare the Market. This suggests there are significant savings available to those who have an electric car, with the average cheapest premium at £527 much lower for electric car drivers than petrol or diesel drivers, which currently stands at £595.

The future

Lower insurance costs add to the savings made on fuel and road tax when switching to electric cars. With the price of petrol and diesel so high, electric cars are an increasingly attractive option for those looking to save money.

Electric cars are more expensive to repair than petrol/diesel cars

Electric cars are generally more expensive to repair than their petrol/diesel counterparts. This is mainly due to the high cost of specialist parts and the need for specialist mechanics to carry out the repairs. Electric car battery packs, in particular, are very expensive to replace, constituting up to 40% of the vehicle's cost.

The limited number of trained mechanics and repair technicians for electric vehicles also contributes to the higher repair costs. According to Jonathan Hewett, chief executive of Thatcham Research, the motor industry needs to improve its ability to design for repair and ensure that repair technicians are appropriately trained and equipped to work on electric vehicles.

However, it is important to note that electric cars have fewer moving parts than petrol/diesel cars, which can reduce the need for costly maintenance and repairs over time. Additionally, electric car batteries have become more repairable, and as the technology becomes more widespread, repair costs may decrease.

The cost of electric car repairs also depends on the specific model and its design. For example, Teslas are known for their high-performance parts, which can make repairs more challenging and costly.

In summary, while electric cars may have higher upfront repair costs due to specialised parts and labour, their long-term maintenance and repair expenses could be lower than those of petrol/diesel cars, especially as the technology and infrastructure for electric vehicles continue to evolve.

Electric car insurance cost depends on the driver's record and history

Electric car insurance costs can vary depending on the driver's record and history. While electric vehicles (EVs) tend to be more expensive to insure than gas-powered cars, there are other factors at play that can affect the overall cost.

One of the main reasons for the higher insurance costs of EVs is the expense of repairing or replacing specialised parts, particularly battery packs, which can cost between $5,000 to $15,000 to replace. As a result, insurance providers may charge more for full-coverage insurance, which includes comprehensive and collision coverage. Additionally, there are fewer repair shops with trained technicians for electric vehicles, leading to higher labour costs for repairs.

However, it's important to note that insurance rates for EVs have been dropping in recent years, especially for established carmakers. The cost of insuring an EV also depends heavily on the brand of car. For example, insuring an EV made by a company that also sells gas cars, such as Ford or Volkswagen, is typically cheaper than insuring an EV from a company that only makes electric vehicles, like Tesla or Rivian.

When determining insurance rates, insurance companies consider various factors, including the driver's record and history. A person's credit-based insurance score, driving history, including traffic violations and at-fault accidents, anticipated annual mileage, usage, and location, all play a significant role in determining the insurance premium. Maintaining a clean driving record and improving one's credit score can help reduce insurance costs.

In summary, while EVs may have higher insurance costs due to the expense of specialised parts and repairs, insurance rates are influenced by a range of factors, including the driver's record and history, and the brand and model of the vehicle.

Electric car insurance is influenced by anticipated mileage, usage and location

Electric car insurance is influenced by several factors, including anticipated mileage, usage, and location. These factors can impact the insurance premium for electric vehicles, and understanding them can help make informed choices when purchasing insurance.

Anticipated Mileage

The mileage you drive annually influences your insurance rates. Insurance companies consider drivers who clock more miles on the road as having a higher risk of accidents, leading to higher premiums. Conversely, those who drive less frequently may be offered low-mileage discounts as they have a decreased chance of getting into accidents. To qualify for low-mileage discounts, you typically need to drive under 7,000 or 5,000 miles per year.

Usage

Usage pertains to how often and for what purpose you use your electric vehicle. If you frequently use your car for daily commuting in heavy traffic or long-distance travel, the risk of accidents or damage increases, potentially leading to a higher premium. Insuring a commercial vehicle, such as a ride-hailing cab or delivery vehicle, may also result in a higher premium due to increased exposure to potential risks.

Location

Your location and driving environment also impact your insurance premium. If you reside or frequently drive in areas with high traffic congestion, accidents, or thefts, your insurance premium is likely to increase. Metropolitan cities like Mumbai, Delhi, or Bengaluru typically have higher premiums due to increased traffic density and a higher probability of accidents or theft.

While these factors influence electric car insurance rates, it's important to note that insurance providers also consider other aspects, such as the driver's record, claims history, age, and credit history. Additionally, the availability of specialised electric vehicle insurance and the increasing popularity of electric cars may contribute to more competitive insurance rates over time.

Electric car insurance is cheaper with specialist providers

Electric vehicles (EVs) are generally more expensive to insure than fuel-powered cars. This is because EVs tend to have more expensive parts, and there are fewer mechanics and repair shops specialising in EVs, which can result in higher repair costs. However, this trend is changing as EVs become more common. As more people buy EVs, insurance costs are decreasing, and the gap between the cost of insuring an EV and a fuel-powered car is shrinking.

Specialist electric car insurance providers may be able to offer cheaper insurance for EVs. This is because they are able to better take into account the specific considerations unique to EVs. They may also offer further discounts to encourage the uptake of eco-friendly vehicles or make donations to environmental charities on your behalf. However, it is important to weigh up the pros and cons of specialist cover, as it may be more expensive and less customisable than a mainstream provider.

When insuring an EV, there are a few things to consider. Firstly, if you lease your battery, you need to inform your insurance provider, as some policies may not cover leased batteries by default. Secondly, if you need to run a charging cable across a public footpath, you may want to add extra liability cover to your policy in case a pedestrian trips over the cable. Finally, you may want to consider adding charging cable cover and battery cover to your policy, as these are common extras that EV owners often opt for.

There are also a few ways to reduce the cost of electric car insurance. One way is to shop around for the best deal, either through comparison sites or by using an insurance broker. Another way is to pay your premium all at once, as monthly instalments often include interest charges. Installing a 'black box' or a dash cam in your car can also help to lower your premium, as these devices monitor your driving behaviour and can prove who was at fault in the event of a crash.

Frequently asked questions