Are Electric Cars Cheaper to Insure?
Key insights:
Electric cars typically have higher insurance premiums than petrol/diesel vehicles due to higher purchase values, battery costs, and specialised repair requirements
Accessing an electric car through a salary sacrifice scheme can reduce overall costs by 20-50%, with insurance included in your monthly payment
As the EV market matures and more insurers enter the space, the price gap between electric and conventional car insurance is expected to narrow
As electric cars continue to gain popularity across the UK, many drivers considering the switch to an electric vehicle (EV) have questions about insurance costs. With the growing electric car market, understanding how insurance premiums compare between EVs and traditional petrol or diesel vehicles is essential for making an informed decision.
What Factors Influence Electric Car Insurance Premiums?
Insurance costs for any vehicle are determined by various risk-based factors, and electric cars have some unique considerations that affect premiums:
Higher Purchase Value: Electric cars typically have a higher initial purchase price than equivalent petrol models, which often translates to higher insurance premiums.
Battery Replacement Costs: The lithium-ion battery pack in an electric car can account for up to two-thirds of the vehicle's value. If damaged, replacement costs are significant.
Repair Complexity: EV repairs often require specialised technicians with specific training, leading to longer repair times (about 14% longer than conventional vehicles).
Parts Availability: As the EV market continues to mature, parts availability is improving but can still affect repair timelines.
Advanced Technology: Many electric cars feature cutting-edge technology and driver assistance systems that can be costly to repair or replace.
How Do EV Insurance Premiums Compare to Petrol/Diesel Cars?
Recent data shows that insurance for electric cars is typically more expensive than for comparable petrol or diesel vehicles. According to industry research, claims for EVs are approximately 25.5% costlier than their internal combustion engine counterparts.
However, the picture isn't entirely straightforward, as some smaller, less powerful electric models like the Smart EQ can be relatively inexpensive to insure, whereas premium electric cars with high performance capabilities and expensive components (like Teslas) generally attract higher premiums. The insurance market is still adapting to the unique risk profile of electric vehicles.
Are Insurance Costs for Electric Cars Changing?
The electric car insurance market is evolving rapidly as insurers gather more data and experience with EVs as more insurers are entering the EV insurance market, increasing competition.
As repair networks develop expertise in EV maintenance, repair times and costs should decrease, and advancements in battery technology may reduce replacement costs over time - although EV lifespans have been shown to be comparable to petrol and diesel cars - with many EVs remaining capable well beyond the 100,000 mile mark, and well past their warranty expiry - making battery replacement rare.
Telematics data from electric vehicles could also eventually lead to more personalised, potentially lower premiums based on driving behaviour.
While the overall insurance market has seen significant premium increases across all vehicle types, the relative difference between EV and conventional car insurance may narrow as the market matures.
Tips for Reducing Your Electric Car Insurance Costs
If you're considering an electric car, these strategies can help manage insurance costs:
Compare quotes extensively: Different insurers assess EV risk differently, so prices can vary significantly
Consider specialist EV insurers: Some companies specialise in electric vehicle coverage and may offer more competitive rates
Negotiate renewal quotes: As one of our customers found, simply calling your insurer can sometimes result in a better deal
Look for multi-car or multi-policy discounts: Combining policies can lead to savings
Install home security: Secure parking and charging arrangements can reduce premiums
Consider your electric car model carefully: Insurance costs vary significantly between different EV models
Additional Benefits Some Insurers Offer for Electric Cars
Some insurance providers offer EV-specific benefits that may add value to your policy:
Roadside charging assistance: Services like RAC's EV Boost provide emergency charging if you run out of battery
Battery coverage: Some policies include specific coverage for battery damage or degradation
Charging equipment coverage: Protection for home charging equipment
Green replacement parts: Some insurers prioritise sustainable repair options
How The Electric Car Scheme Can Help with Electric Car Insurance
When you choose an electric car through The Electric Car Scheme's salary sacrifice scheme, comprehensive insurance can be included in your monthly payment. This approach offers significant advantages:
Tax savings: Since payments are deducted from your gross salary, you save on income tax and National Insurance
Cost predictability: Insurance is bundled into your monthly payment, eliminating unexpected renewal increases
Comprehensive coverage: Full insurance protection is included as standard
Simplified process: No need to shop around for insurance quotes
With the current Benefit-in-Kind rate for electric cars at just 3% for 2025/26, salary sacrifice through The Electric Car Scheme can save drivers 20-50% on their total electric car costs, including insurance.
Making the Right Choice for Your Circumstances
When deciding whether an electric car is the right choice for you financially, insurance is just one factor to consider alongside:
Lower running costs through reduced fuel and maintenance expenses
Tax incentives including the low BiK rate of 3%
Environmental benefits of zero tailpipe emissions
Potential savings through a company electric car scheme
While electric car insurance premiums are currently often higher than for conventional vehicles, the overall cost equation may still favour EVs when all factors are considered—especially when accessed through an electric car salary sacrifice scheme.
What happened when our Marketing Director, Gaurav, dug deeper?
Gaurav, our 31-year-old Marketing Director, lives in Warwickshire with a clean driving record and seven years of no-claims bonus, decided to check the cost of insuring an electric car on moneysupermarket.com in 2024. Currently driving a Tesla Model 3 Performance, he has insured it with Admiral for £1,100 annually. This coverage also includes his wife's petrol Fiat 500X and home insurance as part of a multi-cover policy. When faced with a renewal quote of £1,400 from Admiral, Gaurav managed to negotiate a better deal simply by picking up the phone - a tip worth considering for others in a similar situation!
Are electric cars cheaper to insure?
Currently, most electric vehicles command higher insurance premiums than their petrol or diesel equivalents. However, this gap is likely to narrow as the market matures and insurers gain more experience with EVs.
For those looking to minimise costs while switching to electric, schemes like The Electric Car Scheme's salary sacrifice provide a compelling way to make electric cars more affordable, with insurance included in the monthly payment and significant tax savings available.
If you're considering making the switch to an electric car, exploring the salary sacrifice route through your employer could be the most cost-effective way to embrace electric driving while keeping insurance and other costs manageable.
How can The Electric Car Scheme help with your electric car insurance?
When you choose our all-inclusive salary sacrifice package, we include comprehensive insurance in it. This means you can save 20%-50% on your electric car insurance costs because we deduct it from your gross pay, not your take-home pay.
Our CEO and Co-Founder, Thom Groot, said, ‘At The Electric Car Scheme, we're on a mission to make it easy for everyone to switch to electric vehicles. We know rising insurance costs can be a roadblock, so here's our solution: lease an electric car with insurance included in your monthly payment. With salary sacrifice, you can save 20-50% on your total lease package. We're committed to making the transition to electric simple and affordable for everyone.’
Salary sacrifice is a great way to afford a new electric car when you consider all expenses like lease payments, insurance, tires, servicing, maintenance, home charger, and more. To understand how the scheme works, check out more details here.
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