Why Are Electric Vehicles So Expensive to Insure?

Don't let the high average insurance prices scare you off buying an electric vehicle.

The increasing availability of electric vehicles is encouraging to those worried about climate change and how traditional gas-powered vehicles are contributing to it. But as anyone who's ever tried to purchase an electric vehicle knows, they're not cheap. And the higher costs extend to the insurance drivers pay to cover them.

Here's a closer look at why this is and what drivers of electric vehicles can do to keep their costs down.

The latest technology is expensive

Electric vehicles employ more complex technology than a lot of traditional gas-powered vehicles. This technology helps drivers save on gas and on long-term maintenance costs, but it comes back to bite drivers when they get into an accident.

The parts needed to fix electric vehicles can be expensive, and as a result, auto insurance companies have to pay more out of pocket to get the vehicle back on the road. Complicating things further is the fact that many mechanics aren't well versed in how these electric vehicles work. Drivers may have to take their electric vehicles to a specialty shop for repairs, and that can raise labor costs. Because of this, insurers charge owners of electric vehicles higher rates, but not on all types of insurance.

Collision and comprehensive coverage are what protects the policyholder's own vehicle if it's damaged due to an at-fault accident, a collision with an animal, weather damage, and more. So the cost for these protections is often higher for an electric vehicle.

Liability protection, though, which is what's required by state law, pays for medical costs and repairs for other people and their property if the policyholder causes the accident. This type of protection has nothing to do with the policyholder's own vehicle, so the cost of this coverage isn't affected by owning an electric vehicle.

What electric vehicle owners can do to keep costs down

The type of car a driver has is only one of many factors that affects their premiums. Insurers also look at a driver's accident history, their ZIP code, their education level, their marital status, and a lot more to assess their risk of an accident. Each company weighs all these factors a little differently, which is why they all give different quotes.

Drivers can use this to their advantage by comparing quotes from several companies to see which offers the best deal. Many companies have online quote tools these days, so it only takes a few minutes to see how much a policy would cost. But remember, price isn't everything. Drivers should also look at how much coverage they get for the price and the quality of the insurer's customer service.

Though rare, some companies offer discounts on car insurance to drivers of electric vehicles, so this is something to watch out for. Drivers also might be able to save by enrolling in optional programs, like usage-based car insurance, which monitors a driver's behavior and gives them a discount for safe or infrequent driving.

Finally, if that doesn't work, drivers can raise their deductibles to lower their premiums. This will result in larger out-of-pocket costs in the event of a claim, but drivers can save for this in their emergency fund so an accident doesn't put too much of a strain on their wallets.

Hopefully as electric vehicles become more common, the cost of these vehicles will come down and the number of mechanics comfortable working on them will increase. Then, electric vehicles may not be as expensive to insure. But for the time being, the tips above are the best bet for protecting an electric vehicle on a budget.