Are Electric Cars More Expensive to Insure

At Towerstone, we provide accountancy services in Bedford to local sole traders, landlords, and limited companies. We have written an article about Are Electric Cars More Expensive to Insure to help you see why insurance costs differ, how risk affects pricing, and what this means for ownership.

Electric cars are increasingly popular in the UK as people look for cleaner driving and lower running costs. They can be cheaper to fuel and kinder to the environment but one question I hear repeatedly from drivers and business owners alike is this: are electric cars more expensive to insure?

From my experience working with individuals and company car drivers this is not a simple yes or no. Insurance costs depend on many factors and electric vehicles (EVs) bring their own mix of costs and benefits. In this article I explain how insurance for electric cars compares to conventional petrol and diesel vehicles in the UK. I will look at why costs can be higher or lower who it matters most for and what you can do to reduce premiums. Everything here is grounded in real UK insurance practice not guesswork.

Electric cars and insurance: the basics

Car insurance premiums are calculated using risk factors that include:

the driver’s age and experience

·         where the car is kept

·         claims history

·         annual mileage

·         the model, value and performance of the car

·         repair costs and part availability

·         theft and accident statistics

The type of drivetrain (electric, petrol or diesel) is just one part of the picture. What matters most is how insurers assess risk based on all of these factors.

It is possible for electric cars to cost more to insure than equivalent petrol or diesel models. But it is equally possible for them to be cheaper depending on model, usage and driver profile.

Why electric cars can be more expensive to insure

There are a few consistent reasons why some electric cars attract higher premiums:

·         higher purchase price

·         specialist parts and repair work

·         battery replacement costs

·         novel technology and limited repair networks

·         Higher initial cost

Many electric cars have higher list prices than their petrol or diesel equivalents. Insurance companies see higher value vehicles as more expensive to replace. This can push premiums up.

Battery and specialist repairs

EVs use high voltage batteries and (often) unique body panels and sensors. Parts and repair work can be more expensive and take longer. Insurers factor these potential costs into premiums.

Availability of repairs

Although EV repairs are becoming more common, not all garages and bodyshops have the equipment and training to work on them. This can limit repair options and increase settlement costs.

Limited data

Because electric cars are still newer on UK roads, insurers have less historical claims data to base pricing on. This uncertainty can mean higher premiums in some cases.

Why electric cars can be cheaper to insure

Despite the factors above there are also strong reasons why some electric cars are cheaper to insure:

·         lower performance models

·         lower mileage use

·         fewer moving parts

·         safety technology

·         Lower performance models

A small city electric car with modest power can be cheaper to insure than a high performance petrol car. Insurers look at the whole vehicle profile including acceleration, top speed and safety ratings.

Lower mileage

Many EV owners drive less on average than owners of petrol or diesel cars. Lower mileage reduces accident risk which can lead to lower premiums.

Fewer mechanical failures

Electric vehicles have simpler drivetrains with fewer moving parts. This can mean lower breakdown claims and reduced risk in some categories.

Safety features

EVs often come with advanced driver assistance systems and high safety ratings. These features can reduce the likelihood and severity of claims which in turn reduces premiums.

Who is most likely to pay more for electric car insurance

Some drivers are more likely to face higher insurance costs for electric vehicles:

·         young and inexperienced drivers

·         drivers in high theft or high risk postcodes

·         drivers choosing high performance or premium EVs

·         drivers with limited no claims discount

·         Company car drivers where the EV is a premium model

For these groups the higher replacement and repair costs of electric cars have a bigger impact on premiums.

Who might pay less

Other drivers might find electric cars cheaper to insure:

·         experienced drivers with clean claims histories

·         drivers of low cost, lower powered EVs

·         drivers with strong no claims discount

·         fleet and business drivers where insurers have data and experience

Additionally some insurers now offer discounts or specific EV policies that recognise lower running costs and safety technology.

Real UK examples

Let’s take a few typical scenarios to illustrate:

Small city EV vs petrol equivalent
A modest electric hatchback used for commuting and local driving might attract similar or even lower insurance than a comparable petrol car because of lower performance risk and limited annual mileage.

Premium electric SUV
A higher value electric SUV with expensive battery and specialist parts could attract a higher premium than a mid range petrol SUV even if driven sensibly.

These examples show it is not the electric drivetrain alone that determines cost but the whole package.

How business and company car insurance works

Company car drivers and businesses bring another layer of complexity to insurance costs.

For business owners in Bedford or directors running company fleets the cost of electric car insurance can vary due to:

·         company tax and benefit in kind rules

·         fleet risk profiles

·         driver ages and roles

·         EV fleet discounts

Insurers may treat business use differently based on annual mileage and driver exposure.

From experience premium EVs in a business fleet can still be cost effective overall once lower fuel and maintenance costs are included. But the insurance element still needs careful comparison.

Other costs that affect the overall picture

Insurance is just one part of the total cost of running a car. When comparing electric cars to petrol or diesel you also need to consider:

·         road tax (VED) savings

·         lower fuel costs (charging vs petrol/diesel)

·         maintenance costs

·         charging infrastructure and costs at home or work

·         resale values

In some cases higher insurance is offset by lower costs elsewhere.

How to reduce electric car insurance costs

Here are the approaches that work in practice:

·         compare quotes from multiple insurers

·         build a strong no claims discount

·         choose a model with strong safety ratings

·         secure the vehicle in a garage or secure parking

·         fit approved tracking and security devices

·         consider telematics or black box policies

·         shop around before renewing

Insurers price risk differently. What feels expensive with one provider may be competitive with another.

Does the UK market treat EV insurance differently?

The market is evolving rapidly. As more electric cars enter UK roads and more claims data becomes available insurers can price risk more accurately.

Some insurers now specialise in EV policies that recognise:

·         lower servicing costs

·         safety technology benefits

·         battery warranties

These policies can sometimes be cheaper than standard cover for similar petrol models.

Practical steps before you choose an EV

If you are thinking about an electric car here’s a simple checklist:

·         get insurance quotes before buying

·         compare EV specific insurers

·         understand total running costs not just premiums

·         consider how you will use the car

·         check safety and security ratings

For business owners consider whether the car will be used for personal mileage and ensure the policy reflects that.

The key takeaway

Are electric cars more expensive to insure? The honest answer is: it depends.

Electric vehicles can attract higher insurance premiums but they can also be cheaper in the right circumstances. What matters most is the specific model, who is driving it, where it is kept and how the insurer assesses risk.

From my experience many drivers who think they will pay more discover very competitive quotes when they shop around. Others find that even when the insurance is higher the overall savings in fuel and maintenance still make the EV a sensible financial choice.

Insurance should not be a blocker to choosing an electric car but it is a cost you should research and compare before signing on the dotted line. Understanding the full picture gives you confidence that the car you choose works for your needs and your budget.

If you would like to explore related guidance, you can visit our Bedford Accounting Hub, which brings together practical advice for Bedford clients.