Many drivers are switching to electric vehicles for various reasons, including convenience, fuel efficiency, and environmental responsibility. And now that they are gaining in popularity, most insurance companies are offering insurance policies for electric vehicles, which makes it important to understand why electric car insurance cost is often different than vehicles powered by fossil fuels.
Although switching to an electric car can have numerous advantages, there are a few things you should consider first. For instance, does insurance for an electric vehicle cost more than a gas vehicle? What’s the average cost of car insurance for an electric car? And what exactly qualifies as an electric vehicle? Here’s what you need to know.
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Electric Car Insurance Cost: Frequently Asked Questions
Does it cost more to insure an electric or hybrid vehicle?
The cost of car insurance for electric and hybrid vehicles is estimated to be about 20% more than regular car insurance. This means you are likely to pay the same amount or a bit more because electric and hybrid cars are built with newer technology that’s more expensive to replace or repair.
For example, even if a minor accident causes damage to an electric car’s battery, the insurance company could be looking at over $15,000 just to replace it. In sharp contrast, it only costs between $3,000 and $5,000 on average to replace a gasoline engine. As such, electric car insurance costs are based mostly on the vehicle itself and not the type of fuel it uses.
Some factors that can affect your electric car insurance rates include:
● The type of vehicle you bought (hybrid or fully electric)
● The cost of your vehicle
● The type of battery it has
● How much it would cost to repair or replace
At the same time, you also automatically qualify for an EV discount when you insure an electric or hybrid vehicle. This varies based on your insurance company, but you could save up to 10% on your premiums.
What qualifies as an electric car?
The term “green vehicles” refers to vehicles that predominantly run on fuels other than gasoline and diesel, such as electricity, compressed natural gas, hydrogen, biodiesel, or ethanol. Electric cars fall under this category.
Common types of electric vehicles include:
Electric vehicles (EV)
Electric vehicles (EVs) use an electric motor rather than an internal combustion engine and a battery in place of a gas tank. EVs don’t have tailpipe emissions, and their overall emissions are usually lower than those of gasoline-powered vehicles.
Hybrid electric vehicles (HEV)
These vehicles use an electric motor with a gasoline engine. Only the stereo, air conditioner, and heater are powered by a “mild” HEV battery. A “full” HEV operates at greater speeds like a gas-powered automobile and at lower speeds like an electric car.
Plug-in hybrids (PHEV)
These are hybrid cars that run on both fuel and electricity. PHEVs have an internal combustion engine, a gasoline tank, a battery, and an electric motor. Since PHEVs use both electricity and gasoline as fuel sources, they emit tailpipe emissions.
What type of car insurance do I need for an electric car?
An electric vehicle needs the same type of insurance as regular car insurance. In Ontario, it is mandatory for all vehicles to have a basic car insurance policy. This includes a minimum of $200,000 in third-party liability coverage, as well as accident benefits coverage, uninsured motorist protection and direct compensation coverage.
Third-party liability coverage is your basic level of car insurance. It protects drivers from personal responsibility in the event that they harm or cause property damage to a third party. Liability insurance would help pay for any legal bills or related medical expenses if a driver was involved in an accident for which they were at fault and killed or injured someone, such as a passenger, another driver, or a pedestrian (up to their policy limit).
Let’s say that a collision results in injuries to you, your passenger, a cyclist, or a pedestrian; regardless of who is at fault, accident benefits coverage assists in paying
for things like income replacement, attendant care, rehabilitation, funeral costs, and more.
Uninsured motorist protection guarantees you are compensated for injuries, damages, and other related costs (up to your coverage limit) in the event of a collision with a driver who has no car insurance or a hit-and-run.
After a collision, your insurer will help cover the cost of your vehicle’s repairs through direct compensation—property damage coverage (DCPD). Due to Ontario’s no-fault insurance policy, your insurer still pays despite the fact that the other driver is at fault. Also, since you are working with your personal insurance provider, the claim procedure is quicker.
Optional car insurance coverage for electric vehicles
Drivers can also enhance their insurance coverage policy by customizing their policies with optional coverages. Most choose to include collision or comprehensive coverage.
If you collide with another car, an immovable object, or a person, collision coverage aids in offsetting the expense of repairing your car. Note that if you own your car, it is optional, but it will be required if you lease or finance your car.
With comprehensive coverage, your vehicle is protected from all other dangers, including fire, bad weather, flooding, vandalism, and theft. In essence, it shields you against a wide range of dangers that could harm your car while it is parked. It also covers you if you hit an animal—say, a deer—and it causes damage since you weren’t at fault.
How much does the average auto insurance cost for electric vehicles?
How much your auto insurance will cost for an electric vehicle varies based on the type of vehicle you are insuring, your driving history and what type of coverage you want. A clean driving record with a less expensive vehicle will lead to lower car insurance quotes. That being said, the average cost in Canada ranges from $190 a month up to as much as $400.
Will I save money with an electric vehicle?
Yes, but it may not look like it right away. Although EVs often cost more upfront than gas-powered vehicles, provincial and federal governments provide rebates to help make up the cost difference. Additionally, charging an electric vehicle is significantly less expensive than fueling one powered by gasoline. What would cost you thousands of dollars a year to fuel your gasoline vehicle will only cost hundreds to plug your EV in.
Don’t forget about Ontario’s electric vehicle rebate
If you purchased your electric or hybrid vehicle on or after the program began on May 1, 2019, you may be eligible for a refund under the Zero-Emission Vehicles Program (iZEV), which could help to offset increased insurance premiums. In order to qualify, your vehicle must be battery-electric, a plug-in hybrid electric, or a hydrogen fuel cell vehicle. You could receive up to $5,000 back if your new vehicle cost less than $45,000 to purchase and meets the other requirements.
Or Plug’n Drive’s used electric vehicle incentive
While you won’t qualify for Ontario’s electric vehicle rebate if you buy a used electric car, you will qualify for the non-profit Plug’n Drive’s used electric vehicle incentive program. They offer $1,000 to anyone in Ontario who buys a used electric vehicle as long as the following conditions are met:
● Attend an EV 101, which is a one-hour educational and free seminar, at the Plug’N Drive Discovery Center or an Electric Car Roadshow event, to learn more about the environmental and economic benefits of electric transportation.
● Complete a test drive of an electric car (at no cost) with one of their EV specialists to guide you.
● Buy a used electric car in the year following the seminar (subject to conditions and availability).
Benefits of driving an electric car
There are more advantages to driving an electric or hybrid vehicle than you might realize, such as:
● Reduce fuel costs: as we’ve already mentioned, it generally costs thousands of dollars to refuel your vehicle each year, but with an electric car, the cost to charge it is much lower.
● Reduced environmental impact: If you are driving a fully electric vehicle, you don’t have a tailpipe. This means no tailpipe emissions polluting the air.
● Goodbye gas stations: No more gas stations and fluctuating pricing. And if you have a charging station installed at home, you can plug your car in at night, and it’ll be ready to go the next day!
● Goodbye regular oil changes: electric cars don’t have an internal combustion engine, so you no longer need to get your old changed every three months. You also don’t have to worry about maintaining fan belts, gaskets and radiator hoses.
