The sticker price of electric vehicles (EVs) may have put off consumers in the past, but with prices coming down, manufacturer incentives and potential EV tax credits, more Americans are looking into purchasing an EV. In fact, a recent poll shows that 51% of U.S. adults surveyed said they are strongly considering purchasing an EV in the next few years.
However, while most consumers understand that they will be paying higher upfront costs for an EV, they may not be aware of just how their new vehicle will impact the cost and coverage of their auto insurance. As an insurance agent, you should be prepared to address EV insurance premium-related questions from your policyholders as they make the switch to more environmentally friendly transportation. To help, we’ve put together the most frequently asked insurance premium questions you’ll likely receive from your insureds regarding EVs.
Will insurance for my EV cost more compared with a gas vehicle? While auto insurance coverage for an EV is similar to coverage for a traditional vehicle, an EV will cost more to insure — roughly $442 more per year. Why? Because typically, the higher-priced a vehicle is, the more expensive it is to insure — simply because it will cost more to repair and replace in the event of an accident. According to Progressive Insurance, while EVs have fewer moving parts than conventional automobiles do, the parts can be expensive. In addition, if the battery pack becomes damaged, specific safety protocols must be followed that can also increase the cost of labor and repairs.
“While EVs are [not] the cheapest cars to insure, as they become more commonplace and the availability of parts and qualified repair shops grows, the cost to fix them should go down, as should insurance rates.”
Source: Progressive Insurance.
Are there ways to help reduce the cost of insurance for my EV? Many insurance carriers can apply the same discounts that apply to gas-powered vehicles to EVs, such as multi-policy and claims-free discounts. When submitting applications, be sure to inform carriers about any EV safety technology a vehicle may have, such as collision-avoidance and automatic braking, as these can also result in additional discounts.
Today, Oregon remains the cheapest state to own an EV at an average annual cost of $2,474, while Michigan is the most expensive with an average annual cost of $5,076.
Source: Self Financial, Inc.
Are there special insurance coverage requirements for an EV that could increase my rates? There are no special insurance requirements for EVs. When quoting a policy, carriers will use the same underwriting guidelines for an EV as they would for a gas-powered car.
According to Kelley Blue Book, consumers can be under the impression that they’ll need additional coverage on their home insurance if they maintain a high-voltage charger in their garage or carport, or anywhere else. While securing additional coverage on a homeowners policy isn’t necessary, some carriers may require a photograph or other type of documentation to demonstrate that the home-charging unit has been properly and professionally installed.
The cost of auto insurance has always been and continues to be a contentious topic, with consumers wanting to pay as little as possible for their coverage. As you see more requests for quotes on EV insurance cross your desk, premiums will be one of the top issues of concern for policyholders, and they’ll be looking to you for answers. With the various levels of insurance coverage and available discounts, you can help your insureds determine the best coverage at the most affordable price.
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