Electric (EV) Car Insurance

Thinking of going electric? You're not alone. Electric vehicles (EV), also referred to as electric cars, have surged in popularity. Other than plug-in hybrid electric cars, EVs have no tailpipe emissions, so they're gentler on the planet, and driving an EV means potentially never buying gas again. And today's EVs can venture further between charges, with driving ranges of 200 or even 300 miles.

Of course, electric cars—just like conventional cars—can get into scrapes, so you'll want to get auto insurance. Here’s what you need to know.

Are there differences in getting car insurance for your electric car?

Electric car insurance is just like insurance for a gas-powered vehicle, and you can choose from the same types of coverages like liability, collision, and comprehensive.  

Are EV cars more expensive to insure?

Yes, oftentimes EV car insurance costs more than insurance for a conventional vehicle. There are a few reasons for this. Electric cars are equipped with pricey parts like high-tech sensors, which can be more expensive to repair than their gas-powered peers. And if an EV is totaled, it's generally more expensive to replace than a gas car. 

On the upside, as the costs to build electric vehicles come down, experts say EV car insurance rates may drop as well. And with an EV, of course, you can pocket that gas money (Yay!). 

How does an EV charging station affect homeowners insurance?

If you decide to install an at-home charging station to juice up your EV, there's a possibility that your home's wiring could cause the charger to catch fire. So talk to your insurance agent about adding coverage to your homeowner's policy. And to reduce your risk, hire a licensed electrician to install your charging station.

Installing a Level 2 (L2) charging station might also affect your homeowners insurance because some states require you to have extra coverage for an L2 charger. And should damage occur, some homeowners insurance won't cover the charger itself. (Check your state's laws on what's required for installing an L2 charger.) But if you install a Level 1 (L1) charger your insurance should be unaffected.

Does insurance cover electric battery life?

Not usually because batteries are covered by warranties. Still, there are some exceptions. If your battery is damaged by fire or by impact, such as in a crash, your auto coverage may pay for it. Auto insurance may also replace your battery if it’s stolen.

How important is gap insurance when you buy an EV?

Electric cars tend to depreciate more quickly than gas cars, so EV owners should consider getting new car replacement insurance like AAA New Car Added Protection. This type of coverage pays for repairs or replaces your vehicle, without depreciation, if it gets damaged or totaled by a loss covered in your policy. If your car needs to be replaced, you’ll get a new vehicle that's similar—in kind and quality—to the one that got damaged.

Unsure whether you need this coverage? Hop onto a site like Kelley Blue Book, Edmunds, or JD Power to compare your EV’s purchase price to its current value. If the difference exceeds what you’d want to pay out of pocket if your car got totaled, it makes sense to get new car replacement insurance.

If you have AAA Auto Insurance or are considering switching, AAA offers optional New Car Added Protection.

I lease my EV. Does that change my insurance needs?

It might. When a leased car gets repaired, some leases require that any replacement parts be original equipment manufacturer (OEM) parts. These are parts that were made by the car’s original manufacturer and fit perfectly, rather than aftermarket parts made by another company that might not function as well.

So if you lease an EV, consider getting OEM insurance, which pays for repairs using OEM parts. Bottom line: Before you buy auto insurance, make sure you understand your lease agreement’s terms and conditions so you can get the right coverage.   

What happens if my battery catches on fire?

Fire damage is covered by auto insurance.

Do insurers offer discount programs for electric vehicles?

Yes, EV car insurance discounts are available. 

AAA offers a 5% discount for hybrid/alternative fuel vehicles. The discount is not available in California.

What rebates or tax credits are available for electric vehicles?

If you buy an EV, you can get a federal tax credit up to $7,500, depending on your vehicle's battery capacity.

On top of that, you may get extra rewards from your state for making a more planet-friendly choice. For example, in:

• Alaska: Vehicle owners who charge their EV during non-peak hours get power at a reduced rate, thanks to a discount offered by AEL&P.
• Arizona: Drivers who buy an EV in 2022 get a price break on the vehicle license tax (VLT) they pay when they register their car. While owners of gas cars pay a VLT that’s based on 60% of the car’s original price, the license tax for EVs is based on just 20% of the vehicle’s price. But don’t delay: In 2023, that EV incentive will disappear.
• California: Buy or lease an EV and get a rebate of $1,000 to $7,000. To calculate your own potential savings, visit the California Clean Vehicle Project. Drivers can also get a Clean Fuel Reward of up to $750 for buying an eligible EV.
• Nevada: Lower-income drivers can get a $2,500 rebate from NV Energy when they buy an EV. The utility company also offers rebates for buying and installing Level 2 chargers, and offers a discount to drivers who charge their EV during non-peak hours.
• Utah: EV owners who buy a qualifying Level 2 charger can get a rebate that covers up to 75% of the charger cost from Rocky Mountain Power.

You might also be eligible for local incentives. Tucson drivers who buy an electric vehicle charger for their home can get a rebate of up to $500 from TEP, for example, and EV drivers in Salt Lake City enjoy free metered parking.