First-Time Buyers and Electric Vehicles: Are You Getting the Right Coverage?

Most insurers—both national and regional—offer policies that cover electric vehicles in the same way they cover gasoline cars. That means you’ll typically see familiar options like liability, collision, and comprehensive coverage.

The average annual cost of full coverage car insurance for a hybrid or electric vehicle is $3,140 per year. This is higher than the average cost of full coverage insurance across car makes and models ($2,399).

EVs often carry higher premiums for two main reasons:

1. Costly Battery Replacements: The EV battery is one of the most expensive components to replace, sometimes costing $10,000 or more.
2. Specialized Repairs: Electric vehicles may require trained mechanics or dealerships for repair, which can increase labor costs and reduce the availability of qualified shops in certain areas.

These factors make it especially important for first-time buyers to understand the fine print before committing to a policy.

When comparing electric car insurance, focus on more than just the monthly premium. Make sure your policy protects you against EV-specific risks.

Required Coverages

• Liability Insurance
• Uninsured/Underinsured Motorist Coverage (in some states)
• Medical payments/Personal Injury Protection (PIP) (in some states)

Highly Recommended Coverages for EVs

• Collision and Comprehensive Insurance: While not required by any state, lenders and leasing companies typically mandate them. These cover damage from collisions, theft, vandalism, and natural disasters.
• Gap: Gap coverage pays the unpaid balance on your loan or lease if you experience a covered loss. Typically, gap coverage is required if you lease or finance your vehicle.
• Battery Coverage: Some policies (or riders) will specifically account for the high cost of EV battery replacement—worth investigating.
• Rental Reimbursement: Since EV repairs can take longer due to parts and technician shortages, this can save you money if you’re left without transportation.

Just like with traditional insurance, your driving history, location, and demographics still play a role. But for electric car insurance, insurers also weigh:

• Vehicle make and model: Some EVs, like Teslas, cost more to insure because of expensive parts or advanced technology.
• Annual mileage: Lower mileage may make you eligible for discounts.
• Vehicle equipment: Safety features and anti-theft devices may reduce your premium.
• bWhether your EV is kept in a secure garage matters.

As a first-time buyer, understanding these details can help you shop smarter and avoid surprises when your policy starts.

Most national and regional insurers write policies for electric vehicles. Here are our recommendations for the best auto insurance for electric vehicles:

• Best overall: Auto-Owners
• Best for new-car owners: Travelers
• Best for teachers and emergency responders: Country Financial
• Best for safe drivers: State Farm
• Best for Farm Bureau members: Farm Bureau Financial Services

There are many benefits of owning and driving electric vehicles, which has resulted in a surge in their popularity in recent years. Electric vehicles are not just popular in the U.S. In fact, Tesla is no longer the world’s most popular electric car maker; Chinese automaker BYD holds nearly a third of the market share in China, which now outpaces the U.S. in electric vehicle sales. That said, Tesla still holds nearly half of the U.S. EV market share.

Here are some of the benefits of driving electric vehicles:

• Energy independence: Any resource that generates electricity can power your electric vehicle.
• Lower environmental impact: Electric vehicles reduce your dependence on fossil fuels. A growing percentage of U.S. electricity comes from renewable resources: about 23 percent came from hydropower, wind, biomass, solar, and geothermal energy sources in 2023.¹
• Reduced inhaled emissions: Less time at the gas pump means reducing your risk of inhaling emissions from gasoline and releasing fossil fuels into the air.²
• Reduced fuel expenses: Electric vehicles reduce fuel costs dramatically because of the high efficiency of electric-drive components. Electric vehicles don’t require gasoline, and hybrid electric vehicles use fuel more efficiently than conventional vehicles do. AAA found that the electric vehicle fuel cost per mile for a medium sedan is  $0.04, compared to $0.079 for hybrid vehicles and $0.125 for gas-powered medium sedans.³
• Reduced maintenance expenses: Electric vehicles don’t have many parts that require repairs in conventional vehicles. EVs do not require oil, a head gasket, a clutch, or gears. Thus, they need fewer repairs over time than gas-powered vehicles do.

For example, the cost of maintaining an electric medium sedan driven 15,000 miles per year, according to AAA,is $1,138. Meanwhile, the average annual maintenance cost of a gas-powered medium sedan is $1,634.

For first-time buyers, navigating electric car insurance may feel overwhelming. But with coverage from the right auto insurance company, you can protect yourself from the unique risks of EV ownership—while still enjoying the long-term savings from lower maintenance and fuel costs.

The key is to balance affordability with adequate protection. Don’t just look at the cheapest premium—look at whether your policy covers what matters most: your battery, repair costs, and peace of mind.