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More and more people are purchasing electric vehicles (EVs) for their environmental benefits and financial advantages, such as lower fuel and maintenance costs.
But one important consideration when owning an electric vehicle is the cost of insurance. While insurance for EVs generally works the same as insurance for cars with combustion engines, premiums tend to be more expensive.
Here’s a look at what you need to know before you insure an EV.
Key Points
• Electric vehicle insurance functions similarly to regular car insurance, covering financial losses from accidents or damage.
• Premiums for electric vehicles are often higher due to costly repair and replacement.
• Specialty coverage options, like battery and rental reimbursement, cater to unique EV needs.
• A good driving record and credit score can lower insurance rates for electric vehicle owners.
• Government incentives can help offset higher insurance costs.
Understanding Electric Vehicle Insurance
In general, EV insurance works the same as insurance for a gas-powered car. You pay an insurer a premium for coverage against financial losses in the case of an accident or other damage to your vehicle. It can also protect you against medical bills or other property damage that might occur in the case of an accident.
What Is Electric Vehicle (EV) Insurance?
Most insurers offer the same standard coverage options for EVs that they do for gas-powered cars. This means you’ll probably consider options like liability, collision, and comprehensive coverage when insuring an electric vehicle.
Though not required, you can also purchase additional coverages for extra peace of mind.
How Does EV Insurance Differ from Traditional Car Insurance?
The most notable difference between insuring an EV vs. a hybrid or gas-powered car is the cost. The cost of car insurance for electric vehicles tends to be higher, and there are a few reasons why.
For starters, it can be expensive to repair an EV, as the price of equipment is relatively high — at least right now. Also, not all mechanics work on electric vehicles. You may have to go to a special shop to have repairs made, which could add to the overall cost.
Plus, EVs tend to be more expensive to replace, and as a result, an insurer may decide to charge more for coverage.
Find the Right Auto Coverage at the Right Price.
Competitive quotes from different car insurance providers could help you save $1,007 a year on average.*
The Importance of Specialized Coverage for EVs
As we discussed, EVs typically have a higher value than gas-powered cars, and they often cost more to repair. Purchasing specialized coverage for your electric vehicle may help provide an extra level of protection.
Coverage for your car’s battery, for instance, might be worth exploring, as replacing one can be very expensive. You may also want to look into rental reimbursement coverage, which can help you save money while your EV is being repaired.
Factors Affecting Electric Vehicle Insurance Costs
As we’ve mentioned, there are several factors that can impact the cost of EV insurance premiums. Let’s take a closer look at two common ones.
Vehicle Value and Its Impact on Premiums
EVs tend to be more expensive than traditional cars. The average price paid for a new electric vehicle was about $55,689, according to August 2025 data from Kelley Blue Book. Gas-powered cars averaged about $48,800. That’s a difference of nearly $7,000.
Why the higher cost? EVs make use of specialized technology, such as batteries or regenerative braking systems, which can cost a lot to replace. Battery systems often use expensive raw materials like lithium and cobalt that increase manufacturing costs. Replacing a battery alone can cost anywhere from $5,000 to $20,000.
Higher costs mean the vehicle is more costly to replace or repair. They also signify a greater risk for insurers, which can lead to higher insurance premiums.
The High Cost of EV Repairs
Repairing EVs often requires the services of specialty mechanics who have been trained in electric vehicle repair. The number of repair shops that offer these services may be limited, and working with specialized shops can be more costly than working with traditional mechanics.
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Discounts and Savings for Electric Vehicles
While the cost of EV insurance may be higher, there are opportunities to help offset it.
Types of Discounts Available for EV Owners
For now, the federal government offers a tax credit of up to $7,500 for people who buy or lease an EV. That tax credit is set to expire on September 30, 2025. If you made a payment on an EV before that date, you can claim the credit, per the IRS.
Though the federal tax credit is ending, many states offer incentives of their own in the form of rebates and tax deductions. For example, in California, the California Air Resources Board offers grants of up to $7,500 for EV buyers with qualifying incomes. It also offers grants for charging units of up to $2,000. In New York, you may get a point-of-sale rebate of up to $2,000 is available through the New York State Energy Research and Development Authority.
Local municipalities may also offer various incentive programs.
How to Qualify for Lower Insurance Rates
Qualifying for a lower insurance rate is another way to defray the costs of insurance. The best way to save on the cost of car insurance is to maintain a good driving record. You might consider other strategies such as bundling your auto insurance with home insurance that can reduce overall cost.
You might consider increasing your deductible. Doing so will mean that you will have to pay more out of pocket in the event of an accident. But the more risk you shoulder, the lower your monthly premium may be, which could work to your advantage in the long run.
Another way to save on car insurance: Maintain a good credit score. Studies show that a good score is correlated to safer driving behaviors, so insurers may look at your credit score when setting premium rates. You can give your score a boost by always making payments on time and paying off debts to reduce your credit utilization ratio.
Essential Coverage for Electric Cars
Car insurance coverage needs are typically the same for EVs as they are for traditional gas-powered vehicles. You’ll want to consider liability coverage (required in most states), collision coverage, and comprehensive coverage.
Liability auto insurance covers the cost of property damage and injury to others that you might cause in an accident. Collision insurance covers the cost of damage to your car in an accident, while comprehensive insurance protects against damage that might occur outside of an accident, such as theft or damaging weather events.
Insurers may offer protection specific to EVs, such as coverage for batteries that have been damaged in a covered event.
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Getting Your Electric Vehicle Insurance Quote
The first step toward insuring your EV is obtaining a quote from an insurer.
How to Obtain a Personalized Quote
To get a personalized quote, you’ll need to provide potential insurers with the following information:
• Personal information, including your name, date of birth, and address.
• Your vehicle identification number, or VIN, and the year, make, and model of your car
• Information about the drivers who will be driving the vehicle, including their driving records
• Estimate annual mileage you will be driving
Benefits of Comparing Quotes Before Deciding
Always obtain quotes from multiple insurers. Compare offers to help make sure you are getting the coverage that you need at the best price. Consider online car insurance, which offers personalized coverage at competitive rates.
The Takeaway
For now, EV insurance is more expensive than regular car insurance. However, as the technology continues to become more common and more electric vehicles hit the road, the price of policies may come down. In the meantime, take advantage of grants and tax incentives to help offset the cost of insurance, and be sure to compare options to maximize coverage at the best price.
When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.
FAQ
Is it always more expensive to insure an electric car?
The cost of insurance for electric cars isn’t always more expensive, but it tends to be higher than for equivalent gas-powered vehicles. That’s largely due to the higher sticker price of vehicles and the higher cost of repairs and replacement parts.
Does car insurance cover my EV battery if it gets damaged?
Your car insurance may cover the cost of your EV battery if it is damaged in a covered event, such as an accident, a theft, or a natural disaster. However, it won’t cover damage caused by normal wear and tear.
Do I need special insurance to cover my home charging station?
You probably don’t need special insurance to cover your home charging station. However, it is worth checking with your homeowners insurance provider to find out if you are covered.
Are there special discounts for owning an electric vehicle?
There are government incentive programs that can provide discounts for owning an electric vehicle. Research what’s available in your area before you make a purchase.
How does insuring a Tesla compare to other EVs?
Teslas may have a higher purchase price than other EVs. As a result, the cost of insuring them may also be higher.
photo credit: iStock/3AlexD
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