Electric vehicle (EV) production is on a rapid uptick as manufacturers race to compete with Tesla. Nearly 20 unique EVs from companies like Volvo, Volkswagen, Ford, and Nissan are currently available for sale in the United States, and around 100 new models will debut by the end of 2024.
These new vehicles offer numerous advantages over their gas-powered counterparts. Owners can conveniently “refuel” at home, while these more environmentally friendly vehicles offer high-powered performance. Here’s what you need to know about insuring an electric vehicle if you plan to purchase one in the future.
Insurance: EVs vs. Gas-Powered Vehicles
Electric car insurance tends to cost more than insuring a conventional vehicle since these cars have a higher market value and are more expensive to repair. If you damage your EV’s battery in a fender bender, it costs your insurer more to replace than the battery in a regular vehicle. Extensive repairs from a more significant accident are also typically higher for an electric vehicle.
Though electric car insurance policies cost a bit more than their gas-powered equivalent, all normal incentives still apply, such as discounts for maintaining a good driving record, purchasing multiple policies, remaining claims-free, and insuring more than one vehicle.
What Does it Cost to Insure an Electric Car?
Insurance costs for some EVs aren’t much more expensive than the national average of $1,674 per year. According to NerdWallet, Mercury provides the most affordable insurance rates for electric vehicles in California. We also offer coverage on a variety of brands. Some of the most affordable electric cars to insure are:
- Kia Soul
- Nissan Leaf
- VW E-Golf
- Hyundai Ioniq
- BMW 13
- Chevrolet Bolt
- Honda Clarity
- Ford Mustang Mach-E
Also, consider your home’s electric vehicle charging options. While home damage may be covered under your homeowners insurance, the EV charger itself may not be. A standard homeowners policy excludes coverage related to motor vehicles and their equipment, accessories, and parts.
“Hardwired charging stations are usually considered part of your dwelling, and thus the station would likely be covered depending upon the type and cause of a loss,” says Mercury Insurance Vice President of Property Claims Christopher O’Rourke. “Portable chargers, on the other hand, may be considered vehicle equipment, so it’s a good idea to make sure to have adequate auto insurance coverage as well.”
If an electrical issue with the home’s wiring causes damage to the charger, this will likely be covered by homeowners insurance; otherwise, you’ll need comprehensive auto coverage. If you’re looking to install a 240-volt power outlet or hardwired charging station for at-home electric car charging, work with a trusted local electrician, who is trained, licensed, and insured to install a NEMA 14-50 outlet. (This is similar to the outlet for an electric dryer or oven.) You can also check with your car dealer for installation recommendations.
What Incentives Can I Take Advantage of to Help Offset an EV’s Cost?
The federal government offers a credit for qualifying electric vehicles, with a total allowable amount of $7,500. However, if it passes, new forthcoming legislation may slightly alter past benefits. For instance, credits will not apply to car purchases over $80,000 (Sorry to burst your bubble if you had your eye on an upcoming electric Bentley). Additional credits may be available for vehicles made in the United States or by U.S. labor unions, but consumers will have to wait for a final determination.
It’s worth your time to research state programs for additional electric car incentives before purchasing an EV. As of November 2020, at least 45 states and the District of Columbia offer incentives supporting EVs or alternative-fuel vehicles.
Stay Current on Battery-Related Recalls and Reported Incidents
In fall 2020, General Motors and the National Highway Traffic Safety Administration issued a recall due to battery-related fire risks in the 2019 Chevy Volt. And while rare, there are other reports of fires while an EV is charging.
“The fact is all-electric vehicles are still relatively new to the marketplace, so automakers are still perfecting them,” says O’Rourke. “EV owners need to do their due diligence and make sure they’re properly educated about their manufacturer’s recommendations for proper charging.”