Eyeing Up That Tesla? Here’s What to Know About Insuring It (And Other Electric Vehicles)

It’s estimated that by 2021 there will be at least two million electric vehicles on the road in the United States. What’s more, it’s estimated 18 million electric cars will be on the road by 2030.1 If you’re considering an electric car of your own, it’s natural to have some questions when it comes to buying - and insuring - this kind of car. 

Insuring Electric Vehicles

Electric vehicles are typically more expensive to insure than gas-powered vehicles. The annual premium is typically around 20 percent higher than premiums for comparable cars with a regular combustion engine. This is primarily because electric cars come at a higher price tag and tend to cost more to repair. 

What About Hybrids? 

Hybrids don’t have the same type of all-electric engine that an electric car does, making them (generally) less expensive to repair. The premiums for insuring a hybrid is typically about the same or even a little less than a similar gas-powered vehicle. The hybrid also has a combustion engine and an electric motor powered by energy stored in a small battery. 

What Coverage Is Needed For an Electric Car?

You’ll need the same type of coverage for an electric car that you would for a regular gas-powered vehicle. Your insurance will include a premium (typically paid monthly), and you’ll have a deductible to pay should anything happen to your car. Your insurance will cover things like bodily injury, property damage liability, medical expenses and collision coverage.

Depending on the type of policy you buy, it may also cover extra things like rental car costs, if your car needs to be at the repair shop for a period of time and roadside assistance. Because every insurance policy is different, make sure you read over all of the details carefully. 

Cost-Savings in Electric Vehicles

While you may want to prepare for higher insurance premiums, there are other ways in which an electric vehicle can bring cost savings.

Gas Savings

Driving an electric car means no gas needed. Some drivers view the higher insurance costs as a trade-off for not having to pony up gas money each week. 

Instead, electric cars carry a large battery pack that powers the electric motor. When the battery’s low, the driver can simply plug it in to charge. 

If you’re driving a hybrid, however, you will still be paying for gas (although typically not as much). Your fuel savings will depend on the hybrid model. Some hybrid drivers see an average savings of $300 to $500 per year in gas costs.

Tax Incentives 

There are state and federal programs that may give you certain tax rebates or incentives for owning an electric vehicle. For example, according to the U.S. Department of Energy, there is a federal tax credit of up to $7,500 for an all-electric or plug-in hybrid vehicle that you’ve purchased after 2010.

Unlike a regular gas-powered vehicle, an electric car does not emit exhaust from a tailpipe. It reduces smog in the air from emissions, which is a benefit for the public’s health at large. Electric vehicles are considered alternative energy because it utilizes renewable sources, which reduces our reliance on natural gas. If you’ve been considering purchasing an electric vehicle, whether for environmental purposes or otherwise, do some research beforehand on what you can expect to pay for insurance. Compare the cost with any potential savings, and ask your financial advisor or insurance agent if you have any questions.

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