Are electric vehicles (EVs) more expensive to insure than conventional, gas-powered vehicles? This is one of the most-asked questions by prospective EV buyers. And while a lot of different factors go into insurers’ decisions about how much to charge for a premium on any car, EVs can be more expensive to insure because they’re often declared a total loss after an accident.
Let’s take a closer look at some of the reasons behind the declaration of “total loss” as it relates to EV insurance premiums and unpack some of what the future holds for EV insurance as a whole.
Since EV batteries are unsafe when compromised and can take up half the cost of a vehicle, insurance companies tend to declare EVs a total loss after an accident – even a minor one. Currently, there’s no viable way to repair even slightly damaged batteries without assuming significant liability, but there’s good news for the future. Some companies are starting to make EV batteries that are easier to assess for damage after an accident – and possibly even repair. Once this innovation takes root across the EV market, insurance premiums might adjust accordingly.
EVs tend to be in the shop longer than gas-powered vehicles for repairs and routine maintenance, according to Consumer Reports. This, along with higher repair costs in general, are factored into EV insurance premiums. Supply chain issues and the need for more complicated electronic diagnostics by specialized technicians are some of the reasons behind the extended time EVs can be in the shop. As with the cost of EV batteries, repair costs might come down once the EV market matures.
The repair sector of the EV market has a lot of room for growth when it comes to recruitment, training and skills. According to the U.S. Bureau of Labor Statistics, there are 655,330 people employed as automotive service technicians and mechanics. More than one-third are certified by the National Institute for Automotive Service Excellence (ASE), but only 1.4% of those (3,100 ) have EV-specific certifications. This domestic, and even global, shortage of EV technicians is one of several factors that drives up repair times and raises insurance premiums.
Electronic vehicles contain sophisticated (electronic) control systems which can be breached through multiple entry points by skilled cyber criminals. The greater ecosystem surrounding EVs are also vulnerable to cyberattacks, as hackers looking to do harm can expose consumer data, compromise Wi-Fi networks, and in worse-case scenarios, debilitate power grids all from EV charging stations and EV charging equipment. This sort of “cyber liability” is one of several factors that keeps EV insurance premiums on the high end presently.
So, what can you do to help ensure that you get the right EV coverage at an affordable rate if you don’t want to wait for premiums to level out? Here are three simple tips:
1) Research insurance companies that specialize in EV coverage and get quotes from multiple carriers. Most national and regional auto insurers write coverage for EVs, but some may offer exclusive discounts to electric and hybrid car owners. Remember to inquire about bundling home and auto policies to save extra money when possible.
2) Be sure to ask if any additional coverages are available when shopping for insurance. You may be surprised to find that some carriers may cover things such as home chargers, battery replacement and loss of use coverage. And while this may not directly reduce your premium on the front end, it could provide savings in the long run.
3) Read the conditions and terms of any insurance policy carefully before signing. Ask questions if there are statements that seem unclear, and make a list of the items that are not covered by the policy so that you can easily cross-compare to other policies.
Remember, insurance is just one factor to consider when shopping for an EV. When thoughtfully approached and properly researched, the payoff can be rewarding. And with more adjustments expected to come as insurers gather more data on EV repair costs and the number of EVs on our roads grows, most EV drivers should be able to find coverage that comfortably fits their situation.