Considerations for Auto Insurance with Electric Vehicles
One of the other factors with purchasing an electric vehicle, new or used, is auto insurance. You want to consider the price of the car, how you’re going to use it, maintenance, all that stuff, but also consider insurance. Why would insurance be higher on electric vehicles? Well, here’s why. Automobile insurance generally covers the vast majority of it, including collision damage. It’ll cover liability if you hurt somebody, and theft if somebody steals the car. But mostly, it covers collision damage or physical damage, like if it gets flooded.
Valuable Parts and Collision Impact
The most valuable parts of a gasoline vehicle are usually not affected by a collision. The most valuable parts of the vehicle are the engine, transmission, and driveline. If a car gets crashed, the engine is protected and probably not going to get damaged. Even if you have a full-on total front-end collision, the engine’s going to be toast, but most collisions are not going to completely destroy the engine.
Battery Vulnerability in Electric Vehicles
What about an electric vehicle? Well, in an electric vehicle, the most valuable part is the battery. The battery is not protected in a cocoon in the front of the car; it’s actually part of the floor of the car. So, any side intrusion or damage from underneath, which can happen if you go over a curb the wrong way, can damage the battery. It doesn’t even have to happen from an accident. If a battery is damaged, it’s most likely destroyed. Not only is the battery the most expensive part of the car, but it’s also much more expensive as a percentage than the engine in a standard internal combustion engine (ICE) vehicle.
Cost Implications and Insurance Considerations
For example, the gasoline engine of a standard ICE vehicle might be maybe $7,000 or $8,000. So, if you have a $30,000 car, $7,000 is about a fourth or a fifth of the value, around 20-30%.
Higher Repair Costs and Insurance Rates
If you have an electric vehicle, the battery could be $15,000; it could be half or more of the value of the vehicle. Moreover, it is more subject to damage. You get hit in a side impact—battery’s dead. You go over a curb—battery’s dead. You have a flood that comes up into the battery, and it doesn’t have to be that much because it’s the lowest part of the car—the battery is dead. If you have a flood in a gasoline vehicle, even if the flood gets to the engine, the engine’s waterproof. It might need to be cleaned out and maintained, but it’s not going to completely ruin the engine.
Insurance Pricing and Risk Assessment
All of these factors make insurance companies recognize that electric vehicles have a higher risk of claims that involve bigger dollar amounts. They’re starting to price insurance policies on electric vehicles higher. I don’t think it has anything to do with the use of the vehicles being more dangerous, although they do accelerate faster because they have more torque, so that might be part of it—maybe they get more crashes. But I think it’s more about the repair cost of an electric vehicle because they really have to make sure that the battery is good. Also, the drive engines, which are electric motors, aren’t underneath the hood in a cocoon; they’re at each wheel. So, if you get hit on the side, it could also damage one of the electric motors, which aren’t quite as expensive as the battery but could still be costly.
Final Advice
Definitely check out the insurance quote on an electric vehicle before you decide to buy one to ensure that the numbers work for you before you dive in and own a car with high insurance costs.
