The electric car may have done away with the internal combustion engine, but it hasn't halted the need for car insurance.
In many cases, owners of electric cars can benefit from lower up-front costs, but car insurance rates depend on factors other than engine wear and tear. If you are in the market for electric car insurance, this article will cover the basics of what to expect when insuring your new electric car.
Before we look at the potential cost of electric car insurance, we need to review what we are talking about when we compare the three types of vehicles that are now available on the Canadian auto market.
Tradition automobiles rely on an internal combustion engine that burns some type of fossil fuel like gasoline or diesel. Innovations in EV technology may one day eliminate the presence of traditional motor vehicles on roads.
Hybrid vehicles use a combination of internal combustion and electricity to move and power various parts of the car. Hybrid vehicles generally are more fuel-efficient than traditional automobiles.
Electric vehicles (also known as EVs) run completely on electricity through the use of a large battery and an electric motor. EVs must be regularly recharged, and they are often more affordable to own over the life of the vehicle compared with traditional and hybrid vehicles.
We hear this question all the time.
If electric vehicles are less likely to break down or require repairs, why can the car insurance for EVs be just as high (or higher) than traditional car insurance?
It is true that electric vehicles have far fewer moving parts and require significantly less maintenance to stay on the road. Car insurance isn't priced for auto repairs, though.
Auto insurance is based on a number of factors, but one of the biggest factors is the value of the vehicle.
As a relatively new technology, EVs are often more expensive than traditional or hybrid vehicles. Here are a few examples given in Canadian Dollars
For comparison, a new non-electric Ford Focus starts at $21,838 — nearly half of what the electric version costs! That boost in cost will likely proportionally increase the cost of electric car insurance.
The price increase does not mean that electric vehicles are more likely to be in an auto accident. If your electric vehicle is damaged, repairing the complex electrical systems that power EVs may cost more, and that cost difference may show in your monthly premiums.
Not at all. If electric car insurance was unaffordable, we wouldn't see the growing interest in EV technology.
A recent article in Fox News found that the average annual cost difference per year for electric car insurance was $549.09. Divide that by month, and the average Canadian spends around an extra $45.75 per month to insure their EV.
That may sound like a significant added cost, but the savings in gas expenditures make up for part of that extra expense.
The same article found that, per month, traditional car owners spend an extra $787.61 on fuel compared with EV owners.
Electric cars are free of costly parts that wear down and break in traditional and hybrid cars: air filters, timing belts, spark plugs, head gaskets, starters, oil pans, and fan belts, among others. Over the life of your EV, these cost savings can easily make up for increased insurance premiums.
The Fox News article and others like it quote full insurance coverage. Car owners who have liability-only coverage can expect lower premiums.
When seeking an auto insurance quote, your agent will consider several factors beyond the type of car (electric or not) you currently own or plan to own.
Data from 2020 shows that the province or territory where a driver lives can be a significant factor in the can owner's monthly premiums.
Factors that lead to variation among provinces and territories include average driver age, number of insured drivers on the road, and accident rates.
Canadian drivers are required to have active insurance policies on their vehicles. The required minimum liability coverage amount is $200,000, although that figure may slightly differ depending on the territory or province you live in. It is recommended that drivers meet that minimum amount to be safe.
When choosing car insurance, you can opt for full coverage or liability. Liability coverage protects other drivers that may be involved in an auto accident. Liability coverage will not reimburse you for damage to your electric vehicle.
If the thought of higher electric car insurance has you worried about your next car purchase, keep these tips in mind.
It never hurts to speak to your car insurance agent. That's what they're here for. Electric car insurance isn't a set number. In your conversation with an agent, factors like deductibles can be discussed.
By raising your deductible (the amount you pay before your insurance company picks up the tab), you can significantly lower your monthly premiums. In some cases, the right deductible amount can all but eliminate the extra cost of insuring an EV.
Just remember that, in the event of an accident, you will need to pay more out-of-pocket to cover the cost of repairing or replacing your car.
Since your monthly premium is largely tied to the sticker price of your EV, you may want to consider buying a used EV. Insuring a used vehicle is generally more affordable than insuring a brand new car.
The Canadian market for used EVs continues to grow. One Toronto-based dealership reported a 40% increase in used EV sales.
A used EV can be a great option for a number of reasons. Because electric vehicles have far fewer moving parts than traditional cars, used EVs do not face the same wear and tear that combustion engines face.
EVs also tend to have lower mileage, partly because drivers of electric vehicles have a limited range. For these reasons, used electric vehicles can easily have several years or much longer or life remaining. Having said that however, it has become possible for EV owners to drive across Canada. Look at what Petro Canada has done to make the road trip of a lifetime feasible!
There are several factors driving down the cost of electric car insurance. The biggest factor is the ever-more-affordable cost of buying an EV.
Ever since Tesla Motors released its electric Roadster, innovations by Tesla and other EV manufacturers have continually driven down the price of manufacturing all-electric cars.
Recent research by Bloomberg New Energy Finance predicts that ever-lowering battery costs will make EVs as affordable (if not cheaper) as traditional motor vehicles as soon as 2025.
The drop in price is driven by two factors: reduced manufacturing costs and increased EV sales.
That technology trend would narrow or eliminate the car insurance gap between motor and EV vehicles.
The Canadian EV market is full of great options that range from family-friendly SUVs to sports cars and economical daily drivers.
The car enthusiast blog Wheels.ca reviewed these popular EV newcomers.
The newest generations of EVs come with increased range. Supporting the growth of EVs is the Canadian government's investment in charging stations. To date, the Canadian government has invested $376 million into the national electric vehicle charging infrastructure.
The benefits of EVs are clear. Evermore Canadians are deciding to purchase all-electric vehicles for economical and environmental reasons.
As discussed in this article, the cost of electric car insurance should not be a barrier to owning an EV. The experts at Insurdinary are here to guide you through the process so you can find the right EV insurance to meet your needs and your budget.