The Most Affordable Electric Vehicles to Insure

By the Mercury Team

As electric vehicles (EVs) become more popular, many drivers are looking to make the switch to a greener, more sustainable mode of transportation. However, the cost of insuring an EV can be a significant factor in the total cost of ownership.

“One of the most important aspects when researching your ideal EV is to consider the total cost of ownership, in which insurance plays an important part,” said Chong Gao, Director of Product Management R&D for Mercury Insurance. “We realize that for many customers, this may be their first time considering an EV, and it helps to have as much information at your fingertips as possible.”

In this blog, we’ll explore the most affordable new EVs to insure, compare the insurance costs between electric and gas-powered vehicles, and provide tips on saving on your EV insurance rates.

What Is the Cheapest Electric Car to Insure?

Mercury’s research and development team examined 2024 model-year (MY) EVs that are available at dealerships today to compile this list. The top-ten list for new EVs, beginning with the most affordable make and model to insure, is the:

1. Kia Soul EV
2. Nissan Leaf
3. Ford F-150 Lighting
4. Kia Niro
5. Hyundai IONIQ
6. Volvo C40/XC40 Recharge
7. Chevrolet Equinox EV
8. Fiat 500e
9. Subaru Solterra/Toyota BZ4X/Fisker Ocean Sport
10. VolksWagen ID.4

Insurance for Electric Cars vs. Gas: Do EVs Cost More to Insure?

According to the National Association of Insurance Commissioners, EV insurance costs up to $44 more per month on average than insurance for gas-powered vehicles. Tesla’s Model Y and Model 3 are the most expensive EVs to insure.

Here are some of the key reasons why car insurance on electric cars is priced higher:

Cost of Purchase and Repair

EVs are typically more expensive to purchase than gas-powered vehicles, which translates into higher insurance premiums. Additionally, the batteries that power EVs are costly to repair or replace. Repairing an electric battery is complex and hazardous, often requiring specialized technicians. In many cases, replacing the battery is more economical than repairing it. This contributes to the overall higher insurance costs.

Limited Repair Shops

The scarcity of repair shops specializing in EVs also drives up insurance costs. Fewer shops are capable of handling the unique needs of EV repairs, so labor and parts costs tend to be higher. This scarcity of specialized services means that when an EV needs repairs, it can be more time-consuming and expensive than similar repairs on a traditional vehicle.

Safety and Cybersecurity Concerns

EVs present unique risks that also contribute to higher insurance premiums. These include:

• Battery fires: Although the overall risk of fire in EVs is lower than in gas or hybrid vehicles, the fires that occur are more complex and expensive to extinguish and repair.
• Pedestrian safety: EVs are quieter than traditional vehicles, which can pose risks to pedestrians who might not hear them approaching.
• Cybersecurity threats: As EVs are often more technologically advanced, they can be more susceptible to cybersecurity threats, increasing both the risk and cost of insurance claims.
• Automated driving features: Many EVs come equipped with automated driving features, which, while increasing safety, also add to the complexity and cost of repairs.

Market Dynamics

The market for EV parts and specialized labor hasn’t caught up to demand, which creates supply and service bottlenecks.

Many EV parts—especially batteries, sensors, and specialty body panels—are only available through manufacturers or a limited number of suppliers. That limited supply drives up prices, particularly when vehicles are damaged in accidents. On top of that, the shortage of trained technicians means repairs may take longer and cost more.

All of this adds up. When insurers have to pay more for repairs and wait longer to close claims, they pass some of that cost onto the customer in the form of higher premiums. Until parts become easier to source and more mechanics are trained to work on EVs, this will continue to push EV insurance rates higher than those for traditional vehicles.

How to Save on EV Insurance Rates

When it comes to saving on car insurance for electric cars, consider the following strategies to help reduce your premiums:

Compare Quotes

EV insurance rates can vary widely between insurers, so don’t settle for the first quote you get. Use online tools or work with a local insurance agent to compare coverage options, limits, and premiums.

Shopping around and comparing auto insurance quotes from different providers can help you find the best deal and potentially save you hundreds of dollars a year on electric car insurance costs.

Bundle Your Policies

One of the easiest ways to save is to bundle your auto insurance with other types of coverage, like homeowners or renters insurance. Most providers offer multi-policy discounts that reduce your total premium.

Plus, bundling your policies under one provider can streamline your insurance management because you’ll typically get one bill, one renewal date, and one point of contact for questions or filing claims.

Take Advantage of Discounts

Many companies offer auto insurance discounts for various reasons, and stacking a few of them together can lead to serious savings. Some of the most common discounts apply to safe driving habits, vehicle safety features, and completing a defensive driving course.

Ask about EV-specific discounts

Driving an EV may also make you eligible for special incentives. For example, some insurers offer discounts for owning a green or low-emission vehicle. Be sure to ask your provider about all the different discounts available to help you save as much as you can.

Increase Your Deductible

Increasing your deductible (i.e., the amount you pay out of pocket before your insurance starts covering costs) is a way to reduce your monthly premium. Why? You’re telling your insurance company you’re willing to pay more out of pocket if there’s an accident. That lowers their risk, and in return, they may reward you with lower monthly payments.

Just make sure the higher deductible is realistic. If an accident or damage happens, you’ll need to cover that amount out of pocket before receiving any reimbursement.

Maintain a Good Credit Score

In many states, your credit history plays a role in your insurance premium. Drivers with higher credit scores are often seen as lower risk and may qualify for better rates.

To keep your score in good standing, pay bills on time, reduce outstanding balances, and avoid opening too many new credit accounts at once. Even a modest boost in your credit score could translate to lower EV insurance costs over time.

Drive Fewer Miles Each Year

The less time you spend on the road, the lower your chances of an accident, and the lower your electric vehicle insurance rate may be. If your annual mileage is below a certain threshold, you could qualify for a low-mileage discount. Be sure to report your estimated mileage accurately when requesting a quote.

Review and Update Your Policy Regularly

As your lifestyle or driving habits change, so should your insurance. Whether you’ve paid off your car loan, moved to a safer neighborhood, or changed your commute, these shifts can affect your premium.

Make it a habit to review your policy once a year. That way, you can check in with your provider to see if you still have the right level of coverage or if you could be paying less.

Conclusion

While EVs can sometimes be more expensive to insure due to their higher initial costs and specialized repair requirements, their advanced safety features, low maintenance, and lack of gas costs can make them a financially savvy choice in the long run. By choosing the right make and model and taking advantage of various discounts, you can ensure that your transition to an electric vehicle is both environmentally friendly and economically sound.

Mercury is committed to providing affordable auto insurance options tailored to your needs. Whether you drive an electric vehicle or a traditional gas car, we offer competitive rates and comprehensive coverage to keep you protected on the road.

Frequently Asked Questions About Electric Car Insurance

How much does electric car insurance cost?

According to the most recent data from ValuePenguin, the average cost of insurance for electric cars is about $337 per month or $4,043 per year. However, EV insurance rates can vary based on several factors, including the make and model of your vehicle, your driving history, your location, and even your credit score. To find the best deal, compare quotes, ask about EV-specific discounts, and work with insurers that specialize in electric car insurance.

Are electric cars cheaper?

Electric cars typically have a higher upfront cost than gas-powered vehicles. However, electric cars can be cheaper to own in the long run due to lower fuel costs, reduced maintenance, and potential federal or state tax incentives. EVs don’t require oil changes, have fewer moving parts, and often come with regenerative braking systems that reduce wear and tear. Over time, these savings can offset the initial purchase price.

Are electric cars more expensive to insure?

Generally, yes. According to the National Association of Insurance Commissioners, electric vehicle insurance costs an average of $44 more per month than insurance for traditional gas vehicles. That’s mostly because EVs tend to have higher purchase prices and more expensive parts, especially the batteries. Additionally, repairs typically require specialized technicians, which can drive costs up.

Does EV insurance cover battery damage?

In most cases, yes, electric vehicle insurance will cover battery damage if it’s caused by a covered event, like a collision, fire, or vandalism. The battery is considered a core component of the car, much like an engine in a gas-powered vehicle.

However, if the battery fails due to wear and tear, manufacturing defects, or lack of maintenance, it likely won’t be covered under your standard auto insurance policy. In those cases, your EV’s warranty or extended warranty may be your best bet.

Does Electric Vehicle insurance vary by state?

Yes, EV rates can differ depending on where you live. Factors like local regulations, repair shop availability, EV adoption, and even climate all impact pricing. For example, states with more EV-friendly infrastructure may offer lower premiums, while areas with limited repair options or extreme weather may see higher costs. It’s always a good idea to compare quotes based on your location.