Why is insurance for electric cars so expensive?

Among the more persistent stories about electric cars is that they cost more to insure.

But is that really true?

The introduction of any new technology is often greeted with some skepticism, much of which can be countered quickly by examining the facts.

So, are electric care more expensive to insure? How much do they cost to drive? And how can you find a competitive insurance deal for your EV?

Is it more expensive to insure an EV?

If you were to look solely at the figures when studying the average cost of an insurance policy for a petrol or diesel car compared to an electric one, then you might conclude it’s more expensive.

However, it’s important to remember you’re not comparing like with like.

The percentage of EV vehicles on the road is currently much lower, making a true comparison difficult to make.

The electric vehicle market is still in its relative infancy, and the sophisticated price mechanisms that insurance companies have developed over time in the established petrol car market are not yet in place for EVs.

With that in mind, the cost of insuring electric vehicles could drop as insurers develop an understanding of the typical insurance risks associated with EVs

Another significant element in the larger insurance fee is the higher purchase price of EVs compared to petrol and diesel vehicles.

Instead, if you restrict the comparison between EVs and petrol vehicles of around the same retail price, then the difference in the cost of insurance is significantly narrower.

Which factors affect the cost of EV car insurance?

If you’re wondering ‘are electric cars expensive to insure?’, then it’s important to consider the factors that contribute to the cost of an insurance policy.

As well as the higher initial purchase price and the developing understanding of the insurance risks, which we mentioned above, there are other factors relevant to electric vehicles that can increase the overall insurance cost:

  • Specialised repairs

EV technology is more complex, and requires particular skills and tools for repair. There’s currently an insufficient number of qualified technicians, meaning those that offer EV repairs are in significant demand. This can drive up repair costs with insurers passing this on to drivers through higher premiums. However, the industry is investing heavily in skills training ensuring that existing mechanics and new entrants into the profession have the essential skills to fix EV cars.

  • More expensive parts

Components such as electric motors and batteries are costly to replace. This again increases the costs for the insurers and is reflected in higher insurance costs passed on to drivers.

  • Extra mileage

One of the biggest investors in electric vehicles has been the corporate market. To meet their net zero targets, lots of companies have switched to electric fleets for their employees, many of whom clock up significant mileage every year. Travelling more miles increases the risk of breakdowns and accidents, which in turn pushes up the cost of insurance. As the domestic market for EVs grows in size in relation to the commercial market, average insurance statistics should narrow between different fuel types.

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