Is It Difficult to Get Insurance for Electric Cars?

Electric Cars are increasingly becoming the car of choice for many in the UK. However, potential and existing EV owners often find themselves wondering how easy it is to get car insurance, the costs involved, and whether it is more difficult to get EV insurance compared to insuring traditional petrol or diesel cars. The concern is fueled by reports of higher insurance rates for electric vehicles, along with some insurers’ reluctance to cover them.

In this article, we explore the complexities surrounding the insurance of electric cars. We look at why some insurance companies are hesitant to insure EVs, delve into the specifics of insurance costs in the UK, and shed light on the factors that contribute to the pricing of EV insurance premiums.

Blue hyundai EV on charge

Is It Difficult to Get Insurance for Electric Cars?

No, it is not particularly difficult to get insurance for electric cars. While premiums can be higher, especially for high-performance models due to their value and repair costs, the insurance industry is adapting to EVs with specialised EV policies. Factors like the model, safety features, and driver’s location influence rates. As the market grows and more data is available, getting insurance for electric vehicles is expected to become less difficult.

Why Are Insurance Companies Refusing to Insure Electric Cars?

Some insurance companies are refusing to insure electric cars because of the perceived risk and uncertainty associated with these cars. Not all insurers refuse to cover EVs, the best electric car insurance providers will cover all types of electric vehicles, there are still some insurers that cite concerns that make electric vehicles seem like a riskier proposition compared to petrol cars.

  • Higher Repair Costs
    Electric cars use some fairly advanced technology, including batteries and electric motors, which can be significantly more expensive to repair or replace if damaged. The specialised nature of these components often requires trained EV technicians, further driving up repair costs. Insurance companies calculate premiums based on risk assessment, and the higher potential repair costs of EVs can lead to hesitancy in providing coverage.

  • Battery Replacement
    One of the most costly parts of an electric vehicle is its battery. The battery’s performance can degrade over time, and in the event of a malfunction or significant degradation, the cost of replacement can be substantial. Insurers are concerned about the high costs associated with battery replacement, especially since the technology and pricing of batteries continue to evolve.

  • Limited Historical Data
    Traditional vehicles have been around for much longer than electric cars, allowing insurance companies to amass a wealth of data on accident rates, repair costs, and other factors influencing insurance premiums. The relative novelty of EVs means there is less historical data available, making it more challenging for insurers to accurately assess risk and set premiums. This lack of data can lead to cautious or conservative approaches from insurers, including higher premiums or refusal to insure.

  • Higher Replacement Costs
    Electric vehicles are more expensive than petrol cars, leading to higher replacement costs in the event of a total loss. This financial risk can make insurers hesitant to offer policies for EVs without charging higher premiums.

What Is the Average Insurance for an Electric Car?

There are some negatives to owning an EV, and high insurance costs are certainly one of them! The average insurance cost for electric cars in the UK in 2024 is approximately £654 annually for the most popular models. This figure, however, represents a broad spectrum of insurance premiums, which can vary significantly based on the specific electric car model, ranging from about £400 to over £1,000 per year. 

The variability in insurance costs reflects the diversity in the EV market, there is a wide range of makes, models, and trim levels.

Why Does Insurance on an Electric Car Cost So Much?

The higher cost of insurance for electric cars, compared to traditional cars is down to the initial purchase price and repair costs of EVs being higher. The factors that impact how much electric cars cost in the first place depend on the model’s equipment, advanced technology and how big their battery packs are. The cost of replacing or repairing high-tech components, along with the specialised labour required, contributes to higher insurance premiums.

However, for more affordable and less technologically advanced models, such as the Mini Cooper, Volkswagen ID 3, and Nissan Leaf, insurance costs start from just over £400 per year, so not all electric cars are subject to high insurance rates, it comes down to which EV insurance group they are in.

Does That Make Electric Cars Too Expensive to Insure?

While the average insurance cost for electric cars in the UK is higher than some might expect, it does not necessarily make them too expensive to insure for all drivers. The range in insurance premiums—from as low as £400 to over £1,000 annually—suggests that there are affordable options available, particularly for drivers who choose models known for lower insurance costs. The overall cost of ownership for electric vehicles, including savings on running costs and maintenance compared to traditional petrol or diesel cars, should also be considered when evaluating the expense of insuring an EV.

For many drivers, the benefits of owning an electric vehicle, such as reduced environmental impact and lower running costs, may outweigh the higher insurance premiums associated with some models.

Why Is Tesla Insurance So High in the UK?

Tesla insurance is extremely high in the UK, down to a few several factors that are characteristic of the brand and its cars. Teslas are renowned for their cutting-edge technology, high performance, and relatively high purchase prices, all of which contribute to the higher cost of insurance. Here are some key reasons why Tesla insurance premiums tend to be higher:

  • High Repair Costs
    Tesla cars are equipped with advanced battery systems and autopilot features. When repairs are needed, the costs can be significant.

  • High Replacement Costs
    Teslas have a higher purchase price compared to many other electric and traditional vehicles. The cost to replace a Tesla after a total loss is correspondingly higher, which is a significant factor that insurance companies consider when setting premiums.
Tesla Supercharger with countryside in the background
  • Performance Capabilities
    Tesla’s vehicles, particularly models like the Model S and Model 3, are capable of high performance, with quick acceleration and high top speeds. These performance characteristics can be associated with a higher risk of accidents, leading insurers to increase premiums accordingly.

  • Market Positioning
    Teslas are luxury vehicles, and insurance for luxury vehicles typically comes at a higher cost. This market positioning further influences the insurance rates for Tesla vehicles.

Will Electric Car Insurance Go Down in 2024?

We all hope that electric car insurance will drop in 2024, but predicting how electric car insurance rates will perform is not an easy thing to do. It depends on the technological advancements within the industry, market dynamics, regulatory landscapes, and the insurance industry’s response to the UK’s burgeoning electric car sector. 

As EVs become more common on roads, insurers can gather more detailed information regarding their performance, accident rates, and repair costs. This enhanced data pool is expected to help insurance companies refine their risk assessments, leading to more accurately priced premiums that reflect the actual risk profile of insuring EVs.

Technological advancements in electric vehicles, particularly in terms of safety features and driver-assistance systems, are poised to further influence insurance rates.

Government policies aimed at promoting the use of electric vehicles, including the EV Chargepoint Grant and salary sacrifice schemes, may impact insurance rates. These initiatives not only encourage the adoption of EVs but may also lead to an environment where the overall costs associated with owning and operating electric vehicles, including insurance, become more competitive.

Do You Need Insurance to Drive an Electric Car?

Yes, just like with petrol cars, you are legally required to have insurance to drive an electric car on public roads in the UK. This requirement ensures that all drivers are covered for liability in the event of an accident, protecting both the driver and other parties involved. 

The minimum level of coverage required is third-party insurance, which covers damage to other people, vehicles, and property if you are at fault in an accident. However, many EV owners opt for more comprehensive insurance policies that also cover damage to their vehicle, theft, and other risks.

How Do Safety Ratings Affect Electric Car Insurance Costs?

Safety ratings play a significant role in determining insurance costs for electric cars. 

Insurance companies use safety ratings as one of the key factors in assessing the risk associated with insuring a particular electric vehicle. Cars with higher safety ratings are less risky to insure because they are deemed more capable of protecting occupants in the event of an accident, potentially reducing the likelihood of significant injury claims.

For EVs, safety ratings are determined through a variety of tests that evaluate the car’s ability to withstand crashes, as well as its effectiveness in preventing accidents through advanced safety features. These tests consider multiple scenarios, including front-impact, side-impact, and rollover accidents, to gauge the overall safety of the vehicle. 

Additionally, the presence of advanced driver-assistance systems (ADAS) such as automatic emergency braking, lane-keeping assistance, and adaptive cruise control is taken into account. These technologies can significantly mitigate the risk of accidents, further influencing safety assessments.

A higher safety rating can lead to lower insurance premiums for several reasons:

  • Reduced Injury Claims
    Vehicles that offer better protection to occupants during crashes are less likely to result in severe injuries. This reduces the potential cost of medical claims that insurance companies might have to cover, making these vehicles more attractive from an insurance perspective.

  • Lower Repair Costs
    Cars designed with safety in mind can sometimes sustain less damage in accidents, potentially leading to lower repair costs. While this is not always the case, especially with complex electric vehicle technologies, the principle of damage mitigation through design can positively impact insurance rates.

  • Accident Avoidance
    The inclusion of advanced EV safety and driver assistance features can prevent accidents from occurring in the first place. Insurers often offer discounts for vehicles equipped with such technologies, recognising the reduced risk of claims.

Does Where You Live Effect Electric Vehicle Insurance Premiums?

The location where an EV is registered and primarily driven has a significant impact on insurance premiums, because of the varying levels of risk associated with different areas.

Insurers consider a range of geographic factors when calculating premiums, with the understanding that the likelihood of accidents, theft, and even the cost of repairs can vary markedly from one location to another. Here’s how location influences electric vehicle insurance costs:

Urban vs. Rural Areas
Generally, EV owners living in urban areas may face higher insurance premiums than those in rural settings. This discrepancy is due to the higher traffic density in cities, which increases the likelihood of accidents. Additionally, urban areas often have higher rates of vehicle theft and vandalism. Rural areas, with their lower traffic volumes and reduced risk of theft, may result in lower insurance costs, although the perceived increased miles being driven could be a mitigating factor. If this is the case, and your actual mileage is low, EV owners could consider Pay as You Go EV insurance to try and keep costs down.

Crime Rates
Areas with high crime rates, especially those with a high incidence of vehicle theft or break-ins, tend to have higher insurance premiums. Electric vehicles may be a target for thieves, which could impact insurance costs.

Weather and Environmental Factors
Locations prone to severe weather events, such as floods, or snow storms, can see higher insurance premiums due to the increased risk of damage to vehicles.

The Final Word on How Difficult It Is to Get Insurance for Electric Cars

There are challenges associated with insuring electric cars, but the idea that it is particularly difficult to get insurance for electric cars is not the case across the board. Certainly for those looking for young driver EV insurance or vehicles with high insurance groups, getting EV insurance can be difficult. If you are looking for insurance with bad credit, it can be difficult to get insurance paid monthly, but not impossible if you are willing to pay annually.

The average insurance cost for electric vehicles in the UK is around £654 annually, so premiums are higher compared to traditional vehicles. Factors such as the specific model of the electric vehicle, its safety features, and the driver’s location play crucial roles in determining insurance rates. High-performance models like Teslas may come with higher premiums due to their value and repair costs, but more affordable and less performance-oriented EVs can be cheaper to insure.

Getting insurance for electric cars is not that much more difficult than for traditional vehicles, but it can involve unique considerations such as higher premiums for some models due to their value and repair costs. 

The insurance industry is adapting to the increasing popularity of electric cars, with more companies offering specialised EV policies. As the market grows and more data becomes available, insurance for electric cars is expected to become more competitive and less difficult to buy.

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