Are Electric Cars Cheaper to Insure?

How much does it cost to insure an electric car?

You may have heard that driving an electric car can be cheaper than a petrol or diesel car in the long run and that’s true. Charging at home, comparing and switching to the best energy tariff and using available grants are some ways to make running an electric car cost less than an ICE car.

But with increasing costs for everyday items like groceries and other purchases, the car industry is not shielded from the impact of price rises. A significant cost associated with an electric car is insurance. In this article, we’ll compare how much it costs to insure an EV, how it compares to other cars and factors that affect the price of a policy.

How does EV insurance differ from ICE vehicle insurance?

Insurance is a business of managing risk. A policy acts as a safety net, protecting you from financial loss from an accident, theft or other damages. Depending on the risk level an insurer assigns to you, your insurance policy will either be below or above average or somewhere in between. Whether you have an EV or ICE vehicle, the insurer will consider risk factors such as the type of car, usage, driver’s history and where the car is parked overnight. So in that regard, they aren’t that much different.

Most EV drivers have access to and benefit from off-street parking, with 76% using home charging on a driveway or in a dedicated parking spot as their primary method of charging. At the same time, the differences in technology between EVs and ICE cars also have an impact on the overall cost of a policy. Petrol and diesel cars have been long-established while electric vehicle tech is newer, which influences the cost of insurance.

Why is electric car insurance more expensive than ICE vehicles?

While EVs are on the rise, they are currently more expensive to insure than ICE cars. There are a few reasons why that’s the case:

• Repair cost and parts availability – EVs are newer to the market than other ICE cars, meaning parts may be less available or specialised and their cost could be higher. An insurer will consider this when making their calculations.

• Car value – The price tag of a new car plays a part in determining your insurance premium. On average, EVs have a higher list price than petrol or diesel cars, meaning it will cost more to replace a stolen or totalled electric car.

• Specialised mechanics – You may need to attend a specialised garage with mechanics who are familiar with electric cars, which can come at an extra cost.

• Performance and speed – The rate of acceleration and power of a car will be considered when putting it in an insurance group. The electric motor in EVs provides instant power, making them accelerate faster than many ICE cars, which some insurers may class as a risk.

• Security and safety – Many modern EVs are kitted out with helpful features like cameras and pedestrian detection software to avoid collisions. Anything like this that reduces the likelihood of a claim will be seen in your favour.

Is EV insurance becoming cheaper?

Trends suggest that as EVs become more mainstream, insurance costs are gradually decreasing. There are a number of factors that influence this shift in insurance pricing for electric cars, which will ultimately convince more people to switch to electric driving.

There are now more EVs on UK roads than ever – over 1.1 million! This rise has the effect of making electric cars more common, meaning an increasing number of mechanics and garages will be trained to service and maintain them and parts will become more available.

Adding to this, EVs are becoming more accessible as list prices come down, with many carmakers offering competitively priced entry-level and mid-range models. Putting it simply, a cheaper car will generally cost less to insure.

So, is electric car insurance cheaper?

While initially more expensive, electric car insurance premiums are becoming cheaper over time. Factors such as specialised mechanics, low availability of parts and the overall car value have contributed to higher insurance costs in the past. However, as more EVs are registered in the UK, more mechanics learn about EV technology and parts become increasingly available, you should see insurance costs come down. For potential EV buyers, this makes switching to electric financially more viable, allowing them to make the right choice for their wallet and planet.