Electric vehicle owners face higher insurance costs compared to those driving gas-powered vehicles, according to a report by Insurify. The study reveals that full-coverage car insurance for electric vehicles (EVs) averages $3,430 annually, while gas-powered internal combustion engine (ICE) vehicles cost about $2,778 on average. Insurify’s data analysts attribute this difference to the higher sale prices and repair costs associated with EVs.
While EVs can be cheaper to power than ICE cars—drivers charging at home might spend as little as $812 per year on electricity—the savings can be offset by other expenses. Kelley Blue Book (KBB) estimates the average annual gas cost at around $2,449. However, the initial purchase price of an EV is 13% higher than that of an ICE vehicle, averaging $55,105 compared to $48,724.
Repair costs also contribute to the increased insurance rates for EVs. KBB reports that repairing an EV after an accident averages $6,066—29% more than repairs for ICE vehicles.
The report highlights specific models with high insurance premiums. For instance, insuring a Tesla Model 3 in 2024 averaged $4,362 annually—25% more than insuring a comparable Mercedes Benz A-Class. Other models like the Tesla Model X and Hyundai Ioniq 5 also show significant differences in insurance costs compared to their ICE counterparts.
Despite these challenges, electric vehicle sales increased by 11% in the third quarter of 2024. However, if a proposed repeal of a $7,500 tax credit occurs under the new administration, sales could decline significantly. The National Bureau of Economic Research predicts potential drops between 8% and 27%.
Chase Gardner from Insurify notes that even if EV sales fall drastically due to changes in tax credits or market conditions, insurance costs may not decrease accordingly. He cites rising parts and labor costs since the pandemic as factors influencing future expenses.
For more detailed insights or additional data requests regarding this topic, media representatives are encouraged to contact Insurify directly via email.
