Are Hybrid Vehicles or Electric Vehicles Cheaper to Insure?
Last Updated on June 21, 2020
Hybrid and electric vehicles come with a number of advantages. Is cheaper insurance one of the advantages? Will you pay less for insurance on a hybrid or electric vehicle? Today, we’re explaining everything you need to know about the costs of insuring your hybrid or electric vehicle.
Hybrid Cars and Electric Cars Are Typically More Expensive to Insure than Standard Cars
Generally speaking, hybrid and electric vehicles are more expensive to insure than ordinary vehicles. The difference isn’t enormous. However, there has been a significant difference ever since hybrid and electric vehicles were first introduced in the 2000s.
ValuePenguin recently completed a study comparing standard, gas-powered vehicles with their electric alternatives. Today, you can purchase the Ford Focus, Chevy Spark, Kia Soul, Fiat 500, and other vehicles in either a gas or electric-powered version. This makes it easy to compare insurance costs between two equal vehicles, with the only difference being their use of gas or electricity/hybrid energy.
In that study, ValuePenguin found that electric and hybrid vehicle owners, on average, will pay 7% to 45% higher prices than drivers of a gas-powered vehicle.
On certain vehicles, the difference was surprisingly small. State Farm, for example, charges just 7% to 8% more to insure a Ford Focus, Chevy Spark, or Kia Soul, for example. With GEICO, this difference rises to 22% to 25%, while with Allstate, it’s 23% to 35%.
As you can see, different insurance companies calculate premiums in different ways. Some insurance companies are relatively harsh towards electric or hybrid vehicle owners while others are more accommodating.
Why Are Electric Cars More Expensive to Insure?
Electric cars are more expensive than gas-powered cars. Why?
Well, insurance companies use a number of different things to calculate your insurance premiums, including your driving history, your annual mileage, and the value of your vehicle.
Having an electric vehicle doesn’t necessarily make you a riskier driver. However, in the eyes of your insurance company, you’re still a greater liability. That’s because, generally speaking, electric cars are more expensive to purchase than gas-powered vehicles. They have higher MSRPs and a greater value than their gas-powered alternatives.
The Ford Focus, for example, is priced at around $19,790 for the gas-powered version, but that price rises to $29,960 with the electric version – a difference of over 50%.
The Kia Soul and Chevy Spark, meanwhile, nearly double in price between the gas-powered and electric versions. A gas-powered Chevy Spark is priced at just $13,100, for example, while an electric-powered Chevy Spark is priced at $25,900.
All of this adds up to a simple conclusion: if you were to crash your electric-powered vehicle, it will cost you more to repair or replace that vehicle. If you cause $13,100 in damage to your gas-powered Chevy Spark, then your car is totaled and your insurance company will send you a check for that amount. If you cause $15,000 in damage to your electric-powered Chevy Spark, however, then your insurance company will need to cover the costs all the way up to the value of your vehicle – which is significantly higher than the gas-powered version.
Some Insurance Companies Offer Discounts for Hybrid and Electric Vehicles
There’s one final and important thing to note about the price difference between gas-powered and hybrid or electric vehicles. Some insurance companies offer big discounts when you drive an electric or hybrid vehicle.
These discounts were more common when vehicles like the Prius were first hitting the roads. Today, however, you can still find insurance companies that reward safer, more eco-friendly drivers.
There’s a little bit of trickery behind these discounts. Typically, people who drive hybrid or electric vehicles are some of the safest drivers on the road. Studies show that these drivers tend to drive less frequently, get involved in fewer accidents, are more likely to have stable jobs, and be more educated than drivers of gas-powered vehicles. They also tend to be established men and women in their 40s and 50s. All of this adds up to cheaper insurance rates because, for reasons outside of owning a hybrid vehicle, these drivers are in a lower risk class.
Insurance companies may offer discounts of 5% to 10% for drivers who drive hybrid or electric vehicles.
Final Word – Are Hybrids More Expensive to Insure?
Ultimately, the vehicle you drive is one of the dozens of different factors that go into the cost of insuring your vehicle. Your insurance company looks at the make, model, and type of vehicle you drive. However, factors like your driving history are often way more important.
Generally speaking, drivers of hybrid or electric vehicles will pay more for insurance than drivers of gas-powered vehicles. However, the difference is related mostly to the price and value of these vehicles. Furthermore, some insurance companies offer discounts to eco-friendly drivers that can balance out the higher insurance costs.
As with anything, be sure to compare insurance quotes to make sure you’re getting the best price on your hybrid or electric vehicle’s insurance policy.
