Congratulations! You've bought your first electric vehicle. You know that you'll be contributing fewer toxic emissions to the environment and saving money on gas at the same time. Now you just have to buy auto insurance. Fortunately, electric cars are handled by mainstream insurance companies. Unfortunately, this is one area where having an electric vehicle will not save you money.
There are several reasons why the premiums for electric automobiles are higher than those for similarly-sized gasoline powered cars made by the same companies. Here are some of them:
Unknown Depreciation: Despite that fact that many insurance analysts, automotive experts and investment firms have tried to create an accurate model for the depreciation of electric vehicles, as yet there is no agreement on any specific model, because there is too much uncertainty about electric car technology, and too little information about how long such vehicle will really last.
To an insurance company, which is in the business of assessing risk, the inability to do so is a frightening notion. They need basic information like the longevity, replacement cost and value of the battery system, for example, but because there are such a relatively few electric vehicles on the road - none of which are terribly old - they just don't know what to expect.
Pretend, just for a minute, that you are driving your 2011 Nissan Leaf a year from now, and get in an accident that "totals" the car. In order to figure out what the real deprecation of your car is and pay your claim, your insurance company would have to have data from a comparable vehicle as a basis for assessing what that total will be. Since this information doesn't yet exist, your insurance company increases the assessment of risk, which in turn increases the premiums that you have to pay.
MSRP:
Generally speaking, the higher the sticker price of a vehicle, and the greater the performance and specifications, the more expensive insurance will be, and it should come as no surprise that electric cars, being new technology, are not exactly cheap. The Obama administration's idea of turning federal tax credits for electric vehicles into purchase grants instead, means that there's even more incentive to buying a Chevy Volt or Nissan Leaf, but while the price of that Nissan Leaf could drop from $32,780 to the much more affordable $25,280 if you live in the right state and all the applicable federal and state incentives have been credits, that isn't the value your insurance should be based on.
Instead, your auto insurance should be based on the actual sticker price of the vehicle, before any incentives. Will this cost more money? Yes. On the other hand, if you don't base your coverage on the car's actual value, a total loss claim won't actually pay to replace your vehicle, and you could end up more than $7,000 short.
Cost of Repairs:
Electric vehicles don't have as many replaceable parts in the fuel system or powertrain as conventionally-powered autos, but the parts that exist - batteries, electric motors, and the like - cost more to replace than engines and fuel pumps that can be pulled off the shelf. As well, low production numbers and an ever-growing demand for green vehicles reduces the availability of needed replacement parts.
Since insurance companies would far rather you file a claim for repairs than for a total loss, they offset this lack of parts and the cost to acquire them by boosting your insurance cost.
Saving Money on EV Insurance
Knowing all of this, how do you save money on EV insurance? The following tips may help:
- Always comparison shop and ask questions before committing to any policy.
- Ask for a quote based on MSRP, not your actual purchase price, to avoid being surprised by a higher premium than originally offered.
- Even electric vehicles qualify for low-mileage discounts. Make sure your mileage estimate is as accurate as possible.
- Be sure to keep your car stored in a locked garage at night - this actually makes a difference.
- Consider taking a defensive driving course - it's a sure-fire way to earn a discount.
