‘Our Tesla insurance is DOUBLE what we pay for our gas car!’ Married couple is shocked to discover high cost of covering electric vehicles – so why DO insurers penalize eco-drivers?
- EVs may be more expensive to insure than equally expensive gas equivalents
- Electric cars are made of parts that are harder to replace and more expensive
- Tesla offers its own insurance but uses sensors to penalize bad driving habits
When Brent Shreve and his wife Molly bought new cars in April they spent around $50,000 each on a Tesla Model Y for him and a Volkswagen Atlas for her.
Despite the models being almost-identical in size and costing virtually the same price, the couple were horrified to discover the insurance premiums on the Tesla were double that of the Volkswagen. Insurer State Farm quoted the couple – in their mid 30s – $78 for the gas car and $140 for its electric equivalent.
Being young, inexperienced and driving an expensive car are surefire ways to inflate your insurance premium – but opting for an electric vehicle appears to have the same effect.
DailyMail.com analyzed data from insurance comparison site The Zebra and found that in various scenarios the approximate cost of insuring an electric car was more than the gas alternative.
Brent Shreve and his wife Molly (pictured) live in Fishers, Indiana
The Shreves bought two similarly price cars in April. The 2023 Volkswagen Atlas (left) was around $46,000. The Tesla Model Y (right) cost $53,000. State Farm quoted them almost twice the amount to insure the Tesla
For Shreve, that was a shock. The data consultant decided to invest in an electric car after Covid when he had the opportunity to work from home and did not need the longer range of a gas vehicle.
In turn, he decided to upgrade his wife’s car to something bigger in order to fit their two children for longer trips.
Shreve said he bought the Tesla for $53,000 but was reimbursed with a $7,500 EV tax credit. The Volkswagen Atlas, with an internal combustion engine, was $46,000.
After obtaining quotes from multiple providers and dealing with a local insurance broker in their hometown of Fishers, Indiana, the couple found that the best quote came from State Farm – who had insured their old cars.
‘I had been reading on a lot of Tesla forums that people were getting high quotes,’ Shreve told DailyMail.com. ‘I assumed it would be higher, but not double.’
According to Lynne McChristian, director of the Office of Risk Management and Insurance Research at the University of Illinois at Urbana-Champaign, there are a handful of reasons why insurers would charge more to cover an electric car.
Firstly, insurers lack the data to properly assess the risk.
‘Insurance is a data driven business,’ she told DailyMail.com. ‘Insurance companies have had data on expected losses for auto insurance on gas-powered vehicles for decades, the data for electronic vehicles is more limited because their history isn’t as long.’
‘As we get more electronic vehicles on the road it is very well expected that the cost of their coverage will come down,’ she added.
But there are other reasons EV insurance costs may never come down, and those relate to the way electric cars are made and the technology that goes into them.
‘When they’re damaged, the cost of repair is higher,’ she said. Since electric cars have fewer components, when one does fail its more expensive to replace. That means insurers may prefer writing off a car over repairing it.
Unlike in the past when a windshield could be replaced with relative ease, the sensors that go into them now mean traditionally simple repairs have become longwinded and expensive. That also means they can take a while, leaving the insurance company responsible for renting a replacement car for the customer for even longer periods.
‘If an electric vehicle is involved in a car crash, the likelihood of it being declared totaled is sometimes greater than a gas-powered vehicle because the cost of that battery can be half the price of the car,’ she said. ‘That’s where the cost comes in.’
According to data from The Zebra, the average cost of insurance for a Tesla is $3,000 per year, well above the national average.
And for almost every class of vehicle, the approximate average cost of insurance on an electric car was more expensive than that of equally expensive and capable gas counterparts.
DailyMail.com analyzed data from insurance comparison site The Zebra and found that in various scenarios the approximate cost of insuring an electric car was more than the gas alternative
A 30-year-old single male would spend an average of $1,800 a year for full coverage to drive a Chevrolet Bolt EV. That same person would pay an average of $1,476 to insure a Kia Soul and $1,620 for a Toyota Corolla, according to The Zebra’s approximations.
A similar trend is observed for small sedans. At $2,580, a Tesla Model 3 is around 10 percent more expensive to insure than similarly priced BMW 3 Series cars and vehicles in the Mercedes C-Class range.
For larger vehicles in the small SUV class, a Tesla is again the most expensive to insure. That same 30-year-old would spend around $3,432 for full coverage to drive a Model X. By comparison, the same policy would cost $2,568 for a Mercedes GLS and $2,160 for an Audi Q7, which are all similarly priced vehicles.
Tesla has introduced its own insurance service, available in 12 states, and claims it ‘uniquely understands its vehicles, technology, safety and repair costs, eliminating traditional insurance carriers’ additional charges’.
But some owners who have taken out Tesla policies complain that while they were initially offered well-priced premiums, data collected by the car on how they drive was soon used against them.
Patrice says this collection of data could be positive for all parties by reducing the cost of insurance and encourage more responsible driving.
But Shreve said that although Tesla insurance wasn’t available in his state, he wouldn’t have considered taking it out on his Model Y regardless of how much it cost.
‘I have reservations about their data practices when it comes to privacy and everything they monitor in the car and how that could be weaponized against you,’ he said. ‘I would shy away from doing business with them on those grounds.’
Tesla insurance policy holders can be penalized for accelerating too fast, passing too close to other vehicles, and even driving after 10pm. In California, although the insurance service does exist, state privacy laws prevent the collection of real-time driving data to determine premiums.
Shreve said that although Tesla insurance wasn’t available in his state, he wouldn’t have considered taking it out on his Model Y regardless of how much it cost
While the cost of insurance may be significantly higher, many, including Shreve, would say the financial benefits of driving an electric car more than compensate.
Electric car insurance costs can be offset in part by taking advantage of rebates at local, state, and federal levels. Doing so can also save you money on gas.
This week, data from the US Bureau of Labor Statistics indicated that car insurance prices across the board are up 19 percent on last year – that’s the largest hike since 1976.
According to Patrice, that’s on account of the increasing frequency of expensive collisions and cost of repairing modern cars – electric and gas-powered.
DailyMail.com wrote to Tesla and State Farm for comment on how it calculates insurance premiums but did not hear back.
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