Electric Vehicle Insurance Guide

Electric vehicle owners need the same types of coverage as conventional car owners. Here are the most essential insurance coverages:

• Liability: Liability coverage includes bodily injury and property damage coverage. Bodily injury liability covers the other party’s bodily injury costs if you are at fault. Property damage liability covers the cost of damages to the other party’s vehicle and/or personal property.
• Medical payments: Medical payments coverage (MedPay) reduces or covers the cost of medical bills for you and your passengers after an accident. MedPay is slightly different from personal injury protection (PIP), which includes medical payments coverage and other documented losses, including loss of wages.
• Uninsured motorist coverage: Uninsured and underinsured motorist coverage covers car repairs, collision deductibles, funeral expenses, lost wages, medical bills, rental car costs, and more in the event the at-fault driver has no or insufficient insurance.

No state requires collision or comprehensive insurance, but your bank or dealership will require it if you lease or finance your vehicle. Pay attention to what insurance you need for your new car.

• Collision: Collision insurance covers your vehicle damage regardless of who was at fault.
• Comprehensive: Comprehensive insurance covers your damages from fires, fallen trees, natural disasters, and theft; however, it does not cover normal vehicle wear and tear.

In addition, we strongly recommend these optional coverages for electric vehicle owners:

• Rental car: Rental car coverage reimburses you for the cost of renting a car while yours is in the shop under a covered claim. Because electric vehicle parts are scarcer than traditional vehicle parts, repairs may take longer.
• 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.
• New car replacement: New car replacement insurance provides funds to purchase a brand-new car of the same make/model (minus your deductible) rather than the depreciated value of your totaled car.

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 Insurance
• 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

According to the 2022 Your Driving Costs study from AAA, the annual cost of full coverage car insurance for a hybrid or electric vehicle is $1,619.² This is a higher insurance cost than the weighted average cost of full-coverage insurance across car makes and models ($1,588). You’ll pay more to insure an electric vehicle than a conventional vehicle, for several reasons:

• Cost of electric vehicles: EVs are expensive to repair and replace, resulting in higher rates for comprehensive and collision coverage.³
• Electric vehicle battery replacement: One part, in particular, is a significant factor for insurers: EV battery replacements can cost upward of $15,000.⁴
• Scarcity of parts for electric vehicles: The scarcity of some foreign parts for electric vehicles, coupled with the expense of the parts, makes repairs expensive and could increase your monthly insurance payment.
• Fewer trained electric vehicle mechanics: While the number of electric vehicle registrations continues to rise, there may be a shortage in some areas of trained technicians who can repair your vehicle. A lack of expertise could increase repair or rental vehicle costs.

In addition to the specific factors related to electric vehicles, auto insurance rates are based on many factors. Your demographics, driving history, vehicle make and model, storage accommodations, and the number of miles you drive all determine your car insurance rate.

Owning and insuring an electric vehicle can be expensive, but there are ways to lessen those costs with the right car insurance company. Farmers Insurance, for example, offers a 10 percent discount on all major coverages for those who drive hybrids and other alternative fuel vehicles, including electric cars. Other insurance companies that offer similar discounts for hybrid and electric vehicles include Travelers, Lemonade, TD Insurance, AARP (The Hartford), Liberty Mutual, and Plymouth Rock Assurance.

These are some other popular discounts on auto insurance:

• Accident-free
• Annual mileage
• Good student
• Multivehicle/family
• Paperless/automatic billing
• Safe driving record
• Vehicle equipment

The benefits of owning and driving electric vehicles resulted in a surge in popularity. 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, the Tesla Model 3 still made up nearly half of the U.S. market share as of 2019.

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: 17 percent came from hydropower, wind, biomass, solar, and geothermal energy sources in 2022.⁵
• 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.⁶
• 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 notes that the electric vehicle fuel cost per mile equals 4.04 cents, compared with 10.95 cents for hybrid vehicles; both are below the 2022 weighted average of 17.99 cents across all vehicle categories.
• 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.⁷ Thus, they need fewer repairs over time than gas-powered vehicles do. For example, the operating cost of an electric vehicle driven 15,000 miles per year — which, according to AAA, includes maintenance and repair costs — is $2,396. This is less than half of the weighted average of $5,534.
• Reduced costs over time: Despite higher auto insurance costs, electric vehicles cost less when you consider mileage, incentives, taxes, registration fees, maintenance, and other factors.⁸ There is even a federal credit program for qualifying electric vehicles; you can receive up to $7,500 in tax credits, if eligible.⁹ The total cost per year of owning and operating an electric vehicle is $11,516, which is over 17 percent less than the weighted average of $13,974.¹⁰ Learn more about the difference in cost of gas-powered versus electric vehicles.

You may spend slightly more on your auto insurance policy if you drive an electric vehicle. On the other hand, when you factor in discounts, reduced maintenance expenses, and energy independence, the benefits often outweigh the costs of your electric vehicle.

Electric vehicles continue to soar in popularity, so check back for even more resources for EV owners, like our electric vehicle statistics.