Everything You Need To Know About Insuring Your Electric Vehicle
Electric vehicle (EV) production is on a rapid uptick as manufacturers race to compete with Tesla. Nearly 20 unique EVs from companies like Volvo, Volkswagen, Ford, and Nissan are currently available for sale in the United States, and around 100 new models will debut by the end of 2024.
These new vehicles offer numerous advantages over their gas-powered counterparts. Owners can conveniently “refuel” at home, while these more environmentally friendly vehicles offer high-powered performance. Here’s what you need to know about insuring an electric vehicle if you plan to purchase one in the future.
Are Electric Cars More Expensive to Insure?
Electric car insurance tends to cost more than insuring a conventional vehicle since these cars have a higher market value and are more expensive to repair. If you damage your EV’s battery in a fender bender, it costs your insurer more to replace than the battery in a regular vehicle. Extensive repairs from a more significant accident are also typically higher for an electric vehicle.
Though electric car insurance policies cost a bit more than their gas-powered equivalent, all normal incentives still apply, such as discounts for maintaining a good driving record, purchasing multiple policies, remaining claims-free, and insuring more than one vehicle.
What Does it Cost to Insure an Electric Car?
Insurance costs for some EVs aren’t much more expensive than the national average of $1,674 per year. Some of the most affordable electric cars to insure are:
Kia Soul
Nissan Leaf
VW E-Golf
Hyundai Ioniq
BMW 13
Chevrolet Bolt
Honda Clarity
Ford Mustang Mach-E
Also, consider your home’s electric vehicle charging options. While home damage may be covered under your homeowners insurance, the EV charger itself may not be. A standard homeowners policy excludes coverage related to motor vehicles and their equipment, accessories, and parts.
“Hardwired charging stations are usually considered part of your dwelling, and thus the station would likely be covered depending upon the type and cause of a loss,” says Mercury Insurance Vice President of Claims Kevin Quinn. “Portable chargers, on the other hand, may be considered vehicle equipment, so it’s a good idea to make sure to have adequate auto insurance coverage as well.”
If an electrical issue with the home’s wiring causes damage to the charger, this will likely be covered by homeowners insurance; otherwise, you’ll need comprehensive auto insurance. If you’re looking to install a 240-volt power outlet or hardwired charging station for at-home electric car charging, work with a trusted local electrician, who is trained, licensed, and insured to install a NEMA 14-50 outlet. (This is similar to the outlet for an electric dryer or oven.) You can also check with your car dealer for installation recommendations.
How to Save on Electric Car Insurance
Here are some effective strategies to help you reduce the cost of car insurance for electric cars and maximize your savings:
Increase your deductible: If you’re comfortable with a higher out-of-pocket cost in the event of an accident, consider raising your deductible, which can lower your monthly premium.
Bundle your policies: If you have multiple insurance policies like home and auto, bundling them with the same provider can lead to savings on each policy, including your EV insurance.
Maintain a good driving record: A clean driving record can qualify you for additional discounts and lower premiums.
Review your coverage regularly: As your circumstances change, so do your insurance needs. Review your policy regularly to ensure it still meets your requirements and that you’re not paying for unnecessary coverage.
Pay in full: If you can, pay for your annual premium upfront since many insurers provide a pay-in-full discount.
What Incentives Can I Take Advantage of to Help Offset an EV’s Cost?
The federal government offers a credit for qualifying electric vehicles, with a total allowable amount of $7,500. However, if it passes, new forthcoming legislation may slightly alter past benefits. For instance, credits will not apply to car purchases over $80,000 (Sorry to burst your bubble if you had your eye on an upcoming electric Bentley). Additional credits may be available for vehicles made in the United States or by U.S. labor unions, but consumers will have to wait for a final determination.
It’s worth your time to research state programs for additional electric car incentives before purchasing an EV. As of November 2020, at least 45 states and the District of Columbia offer incentives supporting EVs or alternative-fuel vehicles.
Electric Cars: Pros And Cons
If you’re in the market for an electric vehicle, here are some of the pros and cons you need to consider:
EV Pros
Environmental impact: Electric cars produce zero tailpipe emissions, significantly reducing their environmental footprint compared to internal combustion engines.
Reduced operating costs: Electric vehicles typically have lower operating costs as electricity is cheaper than gasoline. They also have fewer moving parts, resulting in reduced maintenance expenses.
Performance benefits: Many electric cars offer faster acceleration and more responsive handling than gas-powered vehicles, thanks to the instant torque provided by their electric motors.
Tax incentives: As mentioned above, you can benefit from government subsidies, tax rebates, or other incentives that help reduce the overall cost of ownership.
EV Cons
Higher upfront costs: Electric vehicles can be more expensive to purchase than traditional cars, largely due to the high cost of batteries.
Range anxiety: Despite improvements, the driving range of electric vehicles is generally lower than that of gasoline cars. This can cause anxiety about running out of power.
Charging time and infrastructure: Charging an electric car takes longer than refueling a gasoline car, and charging stations are not yet as ubiquitous as gas stations, which can be inconvenient.
Battery life and replacement costs: Over time, the batteries in electric cars can degrade and may need to be replaced, which can be a significant expense.
Check out our EV buying guide for more information about electric cars.
Stay Current on Battery-Related Recalls and Reported Incidents
In fall 2020, General Motors and the National Highway Traffic Safety Administration issued a recall due to battery-related fire risks in the 2019 Chevy Volt. And while rare, there are other reports of fires while an EV is charging.
“The fact is all-electric vehicles are still relatively new to the marketplace, so automakers are still perfecting them,” says Quinn. “EV owners need to do their due diligence and make sure they’re properly educated about their manufacturer’s recommendations for proper charging.”
Compliments of Mercury Insurance
Dan Zeiler
dan@zeiler.com
877-597-5900 x134