Are Electric Cars More Expensive to Insure?

Electric Cars offer a lot of benefits, from reduced emissions to lower running costs

However, when it comes to insurance, are electric cars more expensive to insure? This guide explores the cost of insuring an electric car. We’ll investigate if the higher initial cost of EVs means that we pay a higher insurance premium for electric vehicles. Or are there factors at play that could make them more economical to insure in the long run?

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Are Electric Cars More Expensive to Insure?

Electric cars are more expensive to insure in the UK due to higher purchase prices, the cost of battery technology, and specialised repairs. While insurance premiums do fluctuate based on various factors such as the vehicle model, the driver’s history, and the specific insurer, insuring an EV costs more.

A growing number of insurers are beginning to offer more competitive rates, taking into account the advanced safety features of EVs. Yet, these adjustments in the market haven’t fully bridged the gap in insurance costs between EVs and petrol cars.

The market is adapting and as EV technology advances, cheaper electric car insurance options should become more widely available.

How Does Car Insurance Work for Electric Cars?

In the UK, car insurance is categorised into 50 groups, with 1 being the cheapest and 50 the most expensive. Electric Car insurance groups are determined based on factors such as the car’s value, performance, safety features, and repair costs. 

The insurance group an electric car will influence the insurance premium. Generally, higher group cars are more costly to insure. That being said, the best insurance for electric vehicles will look beyond just the insurance group, they will consider the safety features and record of the EV when pricing the policy.

Electric cars can be placed in higher groups due to their expensive technology, higher repair costs, and the expense of battery replacement. However there are exceptions to that rule, some EVs, especially smaller or more safety-oriented models, may be placed in lower insurance groups.

Why Are Electric Cars So Expensive to Insure?

The higher insurance costs for electric cars are mainly down to the high tech of the vehicles, the complex repairs and the fact that the EV market is fairly new. Here are the main reasons why electric cars are more expensive to insure:

  • Limited Number of Qualified Technicians
    The specialised nature of electric vehicles means that not all mechanics are qualified to repair them. This scarcity of skilled technicians can increase repair costs and also increase the lead time when it comes to your electric car MOT.

  • Cost of Spare Parts
    EV-specific parts, such as electric motors and battery packs, are often more expensive than conventional car parts, meaning you have to pay higher insurance costs than petrol cars.

  • Advanced Technology Costs
    Electric cars often incorporate cutting-edge technology, including sophisticated battery systems, regenerative braking systems and electronics, which can be costly to repair or replace, leading to higher insurance group placements.

  • Battery Replacement Expenses
    The battery is a crucial and expensive component of EVs. Damage to the battery can result in significant replacement costs if it is no longer under warranty, impacting insurance premiums.

  • Uncertainty and Risk Assessment 
    Insurers often rely on historical data to assess risk. With electric cars being relatively new to the market, there is less data available, leading insurers to adopt a cautious approach with increased premiums, even more so when it comes to electric car insurance for young drivers. New or younger drivers are often considered high risk and with the increased power and tech of an EV, they pay the price when it comes to insurance.

  • Battery Fire Risks
    Although rare, concerns about battery fires in electric vehicles can lead to higher insurance premiums due to perceived risks.

  • Higher Purchase Prices
    Electric cars are more expensive than petrol cars. Higher-value vehicles generally attract higher insurance premiums.
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How Much Does It Cost to Insure an Electric Car?

The average insurance cost for an electric car in 2023 was approximately £654. This is based on data provided by Nimblefins, the cost to insure an electric car will clearly vary significantly depending on the make and model:

Tesla Model 3 (Model 3 Long Range AWD)
With an approximate car value of £57,490, the average Tesla Model 3 insurance quote is around £903.

Kia Niro (Niro 4 + EV)
This model, valued at about £36,245, has an average insurance quote of £440.

Volkswagen ID3 (ID3 Life)
For this car, valued at £36,990, the average insurance quote is £424.

Nissan Leaf (Leaf Tekna)
With a value of £28,995, it has an average insurance quote of £428.

Audi e-tron (e-tron Technik 50 Quattro)
This model, priced at £55,310, comes with an average insurance quote of £858.

Hyundai Kona (Kona Premium EV)
Valued at £35,750, the average insurance quote is £460.

Mini Cooper (Cooper S Electric Level 2)
With a value of £31,000, the average insurance quote is £403.

The data provided by Nimblefins offers some good insight about the costs of insuring an EV. Generally, there appears to be a direct correlation between the car’s value and its insurance cost. Higher-value vehicles like the Tesla Model 3 and Audi e-tron command higher insurance premiums (£903 and £858, respectively). This trend is consistent with traditional insurance for petrol cars, where more expensive vehicles have higher insurance costs due to their higher repair or replacement costs.

There’s some variation in insurance costs among different EV models. For instance, the Mini Cooper Electric Level 2, one of the more affordable options at £31,000, has the lowest average insurance quote at £403. But when you look at the cheaper Nissan Leaf, despite being one of the lower-priced models (£28,995), has a slightly higher insurance quote of £428, so there are clearly factors other than just vehicle value, like repair costs and risk assessment, that play a role in how much it costs to insure an electric car.

The insurance costs reflect not just the value but also other model-specific factors. For example, Tesla’s advanced technology and higher repair costs means that its insurance quote costs more, while the Volkswagen ID3’s relatively lower quote of £424, despite a similar value to the Kia Niro, could be influenced by different factors such as parts availability.

Is Electric Car Insurance Cheaper?

Recent Uswitch data helps us answer the question of whether electric car insurance is cheaper than car insurance for petrol cars. According to Uswitch, as of 2023, the average cost of insuring a petrol car in the UK was £541.

When you compare this to the average insurance cost for an electric vehicle EV, which stands at £654, electric car insurance in the UK is not cheaper than petrol car insurance.

The difference of £113 highlights that, on average, EV owners are paying more for their car insurance than petrol car owners.

However, there are a lot of variables influencing insurance costs. As the electric vehicle market evolves and matures, these costs are subject to change, potentially making EV insurance more competitive in the future. For now, though, prospective EV owners should factor in the likelihood of higher insurance premiums as part of their decision-making process.

The reason EV insurance is not cheaper is because of the factors previously discussed, such as higher repair costs for electric cars, the advanced technology, and the fact that EVs are new to the UK insurance market.

Comparing these average insurance costs may not always be like comparing apples to apples. EVs often come with higher purchase prices and advanced features that might not be directly comparable to the average petrol car.

The Final Word on The Cost of EV Insurance

The question of whether electric cars are more expensive to insure than their petrol counterparts is not a straightforward one to answer. Based on current data, including figures from Nimblefins and Uswitch, we can see that electric car insurance, on average, tends to be higher than that of petrol cars in the UK. The average insurance cost for EVs standing at £654 compared to £541 for petrol cars, shows that EVs on average cost £113 more to insure. 

However, this doesn’t paint the full picture. The insurance landscape for electric cars is influenced by various factors like the vehicle’s value, safety features, repair costs, and the evolving nature of the EV market. While EVs may currently fall into higher insurance groups due to their advanced technology and repair needs, the growing familiarity of insurers with these vehicles, coupled with technological advancements and an expanding market, could change this scenario and make them less difficult to insure in the future.

Owning an electric car brings other financial benefits, such as lower running costs, potential EV salary sacrifice tax benefits, and environmental incentives, which can offset the higher insurance premiums to some extent. 

In conclusion, while electric cars may currently be more expensive to insure than petrol cars, as the market for EVs continues to mature, we will see prices reduce and premiums adjust to reflect the broader adoption and understanding of electric vehicles.

This article is intended solely for informational purposes and should not be considered as advice. It is important to consult the specific terms and conditions of an insurer before making any commitments to financial products.

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