Electric vehicle insurance: What to know before you buy

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Electric vehicles are no longer niche — they’re quickly becoming mainstream. According to Cox Automotive, more than 10% of new vehicle sales in the third quarter of 2025 were EVs, a record high that reflects growing interest in cleaner, more efficient transportation.

However, owning an EV comes with unique costs, especially when it comes to insurance. While you’ll save on gas and potentially on maintenance, electric cars often cost more to repair or replace due to their advanced technology and expensive batteries. Before you make the switch, it’s important to understand how EV insurance works, what drives rates higher or lower, and how to find the best coverage for your new vehicle.

Do electric vehicles cost more to insure?

In general, you will pay more to insure an EV than a gas-powered vehicle.

“Premiums may be higher due to specific challenges tied to EVs, such as more expensive repairs and the unique risks associated with their batteries,” writes John Dicken, director of material damage claims at Mercury Insurance, in an email.

Full coverage for a gas-powered vehicle runs an average of $2,663 per year. However, similar coverage for an electric vehicle averages $3,174.

Of course, there are many factors that can contribute to the cost of insuring an EV, and some models are cheaper than others. For instance, these are the cheapest EVs to insure annually:

• Mini Cooper Electric: $2,099
• Kia Niro Hybrid: $2,128
• Ford Escape Hybrid: $2,163

Meanwhile, the Mercedes-AMG EQS is the most expensive EV to insure with an average annual cost of $5,648.  

Factors that affect EV insurance rates

“Many of the same factors that affect premiums for conventional vehicles also apply to EVs, including driving record of the policyholder, location, and vehicle make and model, among others,” according to Dicken.

However, there are some factors specific to EVs that can affect premiums.

Vehicle make and model

Just as with gas-powered vehicles, luxury brands and high-end models will cost more to insure than lower priced EVs. Mercedes, Audi and Tesla are among the makes with the most expensive average annual insurance premiums. Kia, Ford and Honda EVs will cost less to insure.

Cost of parts and battery packs

An EV’s design and components also factor into insurance pricing.

“They are more unified bodies,” says Steven Cegelka, chief operating officer at Ignition Dealer Services, a company that supplies protection products to dealerships. Unibody vehicles connect a vehicle’s body and frame and can be more expensive to repair.

Meanwhile, batteries can run anywhere from $5,000 to upwards of $20,000, according to Cegelka, and that cost gets factored into insurance premiums as well.

Safety features and crash test ratings

Features such as electronic stability control, collision warning and blind spot detection can all help make a vehicle safer to drive and cheaper to insure. Consumers who are shopping for vehicles should pay attention to crash test ratings since those that perform better may have lower insurance premiums.

Driving habits and location

How and where you drive can also affect car insurance rates. Drivers with multiple citations who garage their vehicle in densely populated areas can expect to pay more. Those who drive more miles annually will also likely have higher premiums.

What does EV insurance cover?

Both EV and gas-powered vehicle insurance contains three main components:

• Liability: A certain level of liability insurance is mandated by almost every state. This coverage will pay claims if you injury a person or damage property with your vehicle.
• Collision: Typically required if you are financing your vehicle, collision will pay to repair damages to your vehicle from an accident.
• Comprehensive: Also generally required for financed vehicles, comprehensive coverage pays for losses related to theft, vandalism, natural disasters or accidents involving deer.
  
  

There are also EV-specific coverage add-ons you should consider. These may be options offered by your auto insurance company or can be purchased as separate protection plans from a dealership.

• Battery replacement coverage: Battery degradation is one of consumers’ main concerns with EVs, Cegelka says. A battery replacement plan will replace the battery once it stops charging past a certain amount, such as 70% or 80%. Cegelka says a $500 to $1,000 deductible is common with battery replacement protection plans.
• Charging equipment protection: If you have a wall charger at your home, you may be able to add coverage for it through your car insurance. However, confirm that it isn’t already covered by your homeowners policy before doing that.
• Roadside assistance for EVs: Many insurers offer roadside assistance, including special coverage for EVs. This assistance may pay for a portable charger service, flatbed towing or towing to an EV station if your battery is dead.
• Rental car coverage: Some EVs require specialized service if they break down or are in an accident. That could leave you without your vehicle for up to a month or more while repairs are being made, according to Cegelka. You may want to add on rental car reimbursement to ensure you have a vehicle during that time. 
• Gap insurance: Gap insurance will pay for the difference between the value of your vehicle and what you owe should it be totaled. This coverage can be especially important for EVs which may depreciate quickly and have rapidly changing technology. Cegelka recently worked on a case in which gap insurance paid out $55,000 to a customer because replacement keys could no longer be made for their EV.

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Average cost of EV insurance by model

The average cost of full coverage for a gas-powered vehicle is $2,663. Compare that to the average premiums of these popular EVs.

The table below shows the average annual full coverage premiums for some of today’s most popular electric vehicles.

Best Insurance Companies for EVs

You can buy car insurance for EVs from most major insurers, such as the following:

• Progressive
• State Farm
• GEICO
• USAA
• Travelers

Smaller insurers may also offer coverage for electric vehicles. For instance, Lemonade says it offers discounts for EVs as well as roadside assistance that includes towing to charging stations.

If you own a Tesla, you can even buy insurance direct from the company. Only available in select states, Tesla’s insurance product uses telematics to track your vehicle data and driving habits to create a Safety Score that helps determine your premiums.

Discounts and ways to save on EV insurance

Saving money on EV insurance starts by selecting the right vehicle.

“It’s important for consumers to understand the type of EV they want and then research which models are known for being more affordable to insure within that segment,” Dicken says. “As a general rule, the more expensive the vehicle, the higher the insurance tends to be.”

Once you have settled on a vehicle, use the following strategies to save on your premiums:

• Bundle your EV insurance with home insurance from the same company
• Asked about EV or green vehicle discounts
• Take a defensive driving course for a discount, if offered
• Sign up for telematics, which will track your driving and/or vehicle data to provide a discount
• Be sure your home charger is safely installed to avoid claims

Common challenges with insuring and owning an EV

While buying insurance for an EV is similar to buying coverage for an internal combustion engine, or ICE, vehicle, the claims process may not be as smooth. Some of the challenges you may encounter include:

• Limited parts availability
• Few certified EV repair shops
• Long repair times

You may also need to have a separate protection plan or insurance add-on to cover your battery.

Owners in coastal or flood-prone areas should have a plan to evacuate or safely store vehicles in the event of a natural disaster. Meanwhile, EV owners in rural areas may have the added challenge of finding public chargers while driving long distances.

How electric car insurance compares to gas-powered coverage

Not all EVs are more expensive to insure than gas-powered vehicles. Some, such as the Toyota Venza and Volkswagen ID.4 have average annual insurance costs below the $2,663 average for gas-powered vehicles.

Lower-priced vehicles with advanced safety features are most likely to be cheaper to insure. However, add-on coverages could increase the price

Future of EV Insurance

With federal tax cuts for EVs ending, it is unclear whether their popularity will continue to grow. However, with new vehicle models on the way to market, eco-conscious consumers are likely to continue buying.

In that case, more insurers may offer EV-specific coverage. This could include new telematics programs that monitor not only driving but recharging activity and battery health.

New technology can also affect insurance premiums. For instance, there is limited data about the safety of autonomous driving features, Cegelka says, which means you shouldn’t expect a discount for a vehicle equipped with it.

“It’s more like you’re adding a $10,000 option,” Cegelka says, explaining why it might actually cost you more in insurance premiums.

The takeaway: balancing EV protection and cost

Electric vehicle insurance can be pricier than coverage for gas-powered cars, but the difference isn’t the same for every driver. Your rates depend on factors like your location, driving history, and the make and model of your EV.

The good news? You still have plenty of control. Comparing quotes, asking about EV-specific discounts, and adjusting your coverage levels can help you find affordable protection that fits your needs. With the right policy, you can safeguard your investment — and enjoy the benefits of driving electric — without overpaying for peace of mind.

Maryalene LaPonsie

 

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Insurance expert Maryalene LaPonsie has been writing professionally for 25 years, with the past decade focused on personal finance -- insurance, investing and retirement. She is a regular contributor to U.S. News & World Report, Forbes Advisor, USA Today Blueprint and Money Talks News.