Car Insurance for Electric Cars: What You Need to Know

Electric cars are vehicles that run on electricity instead of gasoline or diesel. They have an electric motor that powers the wheels and a battery that stores the electricity. Electric cars can be charged from an external source, such as a wall outlet or a charging station, or from an internal source, such as a solar panel or a regenerative braking system.

Electric cars are becoming more popular and widespread in the US and worldwide. According to the International Energy Agency, there were about 7.2 million electric cars on the road globally in 2019, which was a 40% increase from 2018. Moreover, according to the Edison Electric Institute, there were about 1.5 million electric cars on the road in the US in 2019, which was a 25% increase from 2018.

If you are an electric car owner or a potential buyer, you might be wondering how car insurance for electric cars works and how it differs from car insurance for conventional cars. In this article, we will inform you about car insurance for electric cars and how it differs from car insurance for conventional cars in four aspects: cost, coverage options, claims process, and environmental impact and benefits.

Difference 1: Cost of Car Insurance

One of the main differences between car insurance for electric cars and car insurance for conventional cars is the cost. Typically, car insurance for electric cars is more expensive than car insurance for conventional cars. According to a study by NerdWallet, the average annual premium for car insurance for electric cars in the US was $2,118 in 2020, which was 23% higher than the average annual premium for car insurance for conventional cars, which was $1,720.

Why are electric cars more expensive to insure than conventional cars? There are several reasons, such as:

• Higher purchase price: Electric cars tend to have a higher purchase price than conventional cars, which means they have a higher replacement cost in case of a total loss. For example, according to Kelley Blue Book, the average transaction price for a new electric car in the US was $49,935 in 2020, which was 41% higher than the average transaction price for a new conventional car, which was $35,378.
• Higher repair cost: Electric cars tend to have a higher repair cost than conventional cars, which means they have a higher claim cost in case of damage. This is because electric cars have more complex and specialized parts and systems, such as batteries, motors, inverters, chargers, etc., that require more expertise and equipment to fix. Moreover, electric car parts and labor are often more scarce and expensive than conventional car parts and labor, which can drive up the repair cost.
• Higher liability risk: Electric cars tend to have a higher liability risk than conventional cars, which means they have a higher potential to cause damage or injury to others in an accident. This is because electric cars are often heavier and faster than conventional cars, which can increase the impact and severity of a collision. Moreover, electric cars can pose some unique hazards in an accident, such as fire, explosion, or electrocution, which can cause more damage or injury to others.

How can you lower the cost of car insurance for electric cars? There are some tips, such as:

• Shop around: One of the best ways to lower the cost of car insurance for electric cars is to shop around and compare quotes from different providers. Different providers have different ways of calculating premiums and assessing risks, so the price you get from one provider might not be the same as another. By comparing quotes from multiple providers, you can find the best deal that suits your needs and budget.

• Choose a higher deductible: Another way to lower the cost of car insurance for electric cars is to choose a higher deductible. A deductible is the amount of money you have to pay out of your own pocket before your insurance company pays for the rest of a claim. A higher deductible means a lower monthly premium, but also a higher out-of-pocket cost in case of a claim. You should weigh the pros and cons of each option and choose what suits your budget and risk tolerance.

• Take advantage of discounts: Another way to lower the cost of car insurance for electric cars is to take advantage of discounts that are offered by many providers. Discounts are incentives that can help you save money on your car insurance by rewarding you for certain behaviors or characteristics. Some of the common discounts for electric car owners are:

  • Low-mileage discount: If you drive less than a certain number of miles per year (usually 10,000 or less), you can get a discount on your car insurance. This is because driving less reduces your exposure and risk of getting into accidents or claims. You will need to provide proof of your mileage to qualify for this discount.
  • Safety feature discount: If your electric car has certain safety features that can prevent or mitigate accidents or injuries, such as anti-lock brakes, airbags, lane departure warning, blind spot detection, etc., you can get a discount on your car insurance. This is because safety features can reduce the severity and frequency of claims. You will need to provide proof of your safety features to qualify for this discount.
  • Green vehicle discount: If your electric car is certified as a green vehicle by the Environmental Protection Agency or other organizations, you can get a discount on your car insurance. This is because green vehicles have a lower environmental impact and higher environmental benefits than conventional vehicles. You will need to provide proof of your certification to qualify for this discount.

You should check with your provider what discounts they offer and how to qualify and apply for them. You should also review your policy periodically and update it with any changes that could affect your eligibility for discounts.

Difference 2: Coverage Options

Another difference between car insurance for electric cars and car insurance for conventional cars is the coverage options. The coverage options for electric cars are similar to the coverage options for conventional cars, such as liability, collision, comprehensive, etc. However, there are some additional or specialized coverage options that are available or recommended for electric cars, such as battery coverage, charging station coverage, green parts coverage, etc.

What are these additional or specialized coverage options and how can they protect electric car owners from specific risks or scenarios that are unique to electric cars? Here are some examples:

• Battery coverage: Battery coverage is a type of coverage that pays for the repair or replacement of the battery of your electric car in case of damage or malfunction. The battery is one of the most expensive and important parts of an electric car, and it can be damaged by various causes, such as accidents, fire, theft, vandalism, wear and tear, etc. Battery coverage can help you cover the cost of fixing or replacing your battery, which can range from $5,000 to $15,000 or more depending on the type and size of the battery.
• Charging station coverage: Charging station coverage is a type of coverage that pays for the damage or loss of your electric car or its accessories while it is plugged into a charging station. Charging stations are places where you can charge your electric car’s battery from an external source, such as a wall outlet or a public station. Charging stations can be vulnerable to various risks, such as power surges, electrical faults, vandalism, theft, etc. Charging station coverage can help you cover the cost of repairing or replacing your electric car or its accessories, such as cords, plugs, adapters, etc., if they are damaged or lost while charging.
• Green parts coverage: Green parts coverage is a type of coverage that pays for the repair or replacement of your electric car’s parts with parts that are environmentally friendly or recycled. Electric cars are designed to be more eco-friendly than conventional cars, but they still have some parts that can harm the environment if they are disposed of improperly, such as batteries, motors, inverters, etc. Green parts coverage can help you reduce your environmental impact and support the green economy by using parts that are made from renewable materials or recycled from other vehicles.

These additional or specialized coverage options are not mandatory, but they can be useful and beneficial for electric car owners who want more protection and peace of mind. You should check with your provider if they offer these options and how much they cost. You should also compare them with other options and see which ones are more suitable and cost-effective for you.

Difference 3: Claims Process

Another difference between car insurance for electric cars and car insurance for conventional cars is the claims process. The claims process for electric cars is similar to the claims process for conventional cars, such as filing a claim online or by phone, providing evidence and documentation, getting an estimate and a settlement, etc. However, there are some challenges or complications that can arise in the claims process for electric cars, such as finding a qualified repair shop, dealing with battery damage or replacement, verifying the cause and extent of damage, etc.

How can you overcome these challenges or complications and ensure a smooth and fair claims process for electric cars? Here are some tips:

• Find a qualified repair shop: One of the challenges in the claims process for electric cars is finding a qualified repair shop that can fix your electric car properly and efficiently. Electric cars have more complex and specialized parts and systems than conventional cars, and they require more expertise and equipment to fix. Not all repair shops have the skills or tools to handle electric cars, and some may charge more or take longer than others. You should find a repair shop that is certified or recommended by your provider or by the manufacturer of your electric car. You should also check their reviews and ratings from other customers and verify their credentials and warranties.
• Deal with battery damage or replacement: Another challenge in the claims process for electric cars is dealing with battery damage or replacement. The battery is one of the most expensive and important parts of an electric car, and it can be damaged by various causes, such as accidents, fire, theft, vandalism, wear and tear, etc. If your battery is damaged or malfunctioning, you may need to repair or replace it, which can be costly and time-consuming. You should check your policy and see if you have battery coverage that can cover the cost of fixing or replacing your battery. You should also check your warranty and see if you have battery warranty that can cover the cost of fixing or replacing your battery. You should also follow the instructions and precautions from your provider or manufacturer on how to handle and dispose of your battery safely and properly.
• Verify the cause and extent of damage: Another challenge in the claims process for electric cars is verifying the cause and extent of damage. Electric cars can have some unique causes and types of damage that are not common or obvious in conventional cars, such as electrical faults, software glitches, fire, explosion, electrocution, etc. These causes and types of damage can be hard to detect or prove, and they can affect the value and functionality of your electric car. You should provide as much evidence and documentation as possible to support your claim, such as photos, videos, receipts, reports, etc. You should also cooperate with your provider and adjuster and answer their questions honestly and accurately.

By following these tips, you can overcome the challenges or complications in the claims process for electric cars and ensure a smooth and fair claims process for electric cars.

Difference 4: Environmental Impact and Benefits

Another difference between car insurance for electric cars and car insurance for conventional cars is the environmental impact and benefits. Electric cars have a lower environmental impact and higher environmental benefits than conventional cars, such as reducing greenhouse gas emissions, air pollution, noise pollution, etc. Car insurance for electric cars can reflect and reward these environmental impact and benefits by offering lower rates, discounts, credits, or donations for driving less or greener.

How do electric cars have a lower environmental impact and higher environmental benefits than conventional cars? Here are some examples:

• Reducing greenhouse gas emissions: Electric cars can reduce greenhouse gas emissions by using electricity instead of gasoline or diesel to power their motors. Electricity can be generated from renewable sources, such as solar, wind, hydro, etc., which have lower carbon footprints than fossil fuels. According to the US Department of Energy, driving an electric car can reduce greenhouse gas emissions by 50% to 70% compared to driving a conventional car, depending on the source of electricity.
• Reducing air pollution: Electric cars can reduce air pollution by emitting zero tailpipe emissions that can harm human health and the environment. Tailpipe emissions are the gases and particles that come out of the exhaust pipe of a vehicle, such as carbon monoxide, nitrogen oxides, particulate matter, etc. These emissions can cause health problems such as asthma, lung cancer, and cardiovascular disease, as well as environmental problems such as acid rain, smog, and ozone depletion. According to the US Environmental Protection Agency, driving an electric car can reduce tailpipe emissions by 100% compared to driving a conventional car.
• Reducing noise pollution: Electric cars can reduce noise pollution by operating more quietly than conventional cars. Noise pollution is the unwanted or harmful sound that can disturb human well-being and wildlife habitat. Noise pollution can cause health problems such as stress, anxiety, sleep disturbance, and hearing loss, as well as environmental problems such as reduced biodiversity, altered behavior, and impaired communication. According to a study by Transport & Environment, driving an electric car can reduce noise pollution by 50% to 90% compared to driving a conventional car.

How can car insurance for electric cars reflect and reward these environmental impact and benefits? Here are some examples:

• Offering lower rates: Some providers offer lower rates for electric car owners than conventional car owners, because they consider them to be safer and more responsible drivers who have lower risks of getting into accidents or claims. For example, according to a study by ValuePenguin, the average annual premium for car insurance for electric cars in the US was $1,097 in 2020, which was 9% lower than the average annual premium for car insurance for conventional cars, which was $1,205.
• Offering discounts: Some providers offer discounts for electric car owners who drive less or greener than average, because they consider them to be more eco-friendly and more cost-efficient drivers who have lower environmental impact and lower driving expenses. For example, as we mentioned before, some providers offer low-mileage discounts or green vehicle discounts for electric car owners who drive less than a certain number of miles per year or who have a certification as a green vehicle.
• Offering credits or donations: Some providers offer credits or donations for electric car owners who want to offset their carbon footprint or support environmental causes, because they consider them to be more socially conscious and more philanthropic drivers who have higher environmental benefits and higher social impact. For example, as we mentioned before, some providers offer carbon offset programs or green parts coverage for electric car owners who want to offset their carbon emissions or use environmentally friendly or recycled parts.

By offering these incentives and rewards, car insurance for electric cars can not only reflect and reward the environmental impact and benefits of electric cars, but also encourage and support the adoption and development of electric cars and related infrastructure and technology.

Conclusion

Car insurance for electric cars is an important and valuable option for electric car owners and potential buyers. It can differ from car insurance for conventional cars in four aspects: cost, coverage options, claims process, and environmental impact and benefits. It can offer some advantages and disadvantages, such as higher premiums, additional coverage, specialized claims, lower rates, discounts, credits, etc.

If you are an electric car owner or a potential buyer, you should compare quotes and policies from different providers and find the best car insurance for your electric car. You might be surprised by how much value you can get from car insurance for electric cars.

We hope you found this article helpful and informative. If you have any questions or comments, please feel free to contact us. We would love to hear from you. Thank you for reading and happy driving!