How much does electric car insurance cost?

It seems that electric cars cost less to use than their internal combustion engine counterparts. That’s true, but what about the insurance for these cars?

Operating costs are among the biggest advantages of electric cars compared to petroleum vehicles. And for good reason: these autos have a simpler mechanical design than fossil fuel-powered models, with limited maintenance costs and fewer mechanical breakdowns. They also hold a clear advantage when energy costs are factored in. When charging your electric car at home in France, with electricity prices just over 0.17 euros on average, a full charge of a large 70 kWh battery costs just under 10 euros. A full tank of gasoline allowing you to travel the same distance under daily conditions usually costs over 60 euros.

Tax Exemption

One might assume that the mechanical simplicity of these electric cars also helps to reduce insurance premiums (due to a lower risk of breakdown). Unfortunately, the reality is more complex. First, the rates charged by insurers depend notably on the value of the insured vehicle. Typically, the price of an electric vehicle is higher than that of a comparable internal combustion model (especially for city cars and more affordable categories). Fortunately, until December 31, 2023, drivers of electric cars are exempt from the TSCA tax, unlike drivers of thermal vehicles, which helps reduce premiums by about 25%. And while some insurance company representatives have recently suggested that monthly premiums could increase due to the high new car prices of these electric vehicles, there is still a lack of long-term data to be certain. Furthermore, do electric car drivers have fewer accidents than those driving fossil fuel-powered cars? Are they less aggressive? As the market share of electric cars becomes finally significant, we will soon have more insights on that. But initial feedback seems to favor electric cars.

Run a Simulation

Specifically, we wanted to study the monthly insurance payments offered by online comparison tools for two similar models, one electric and one with an internal combustion engine. Let’s start with the example of the Peugeot 208 in Allure trim. The electric e-208, costs €34,850 with a 136-horsepower engine. The gasoline version 208 costs €24,120 with a 100-horsepower engine. The electric version is nearly €11,000 more expensive at the same trim level. Although in this case it benefits from a slightly more powerful engine and can fortunately count on the €6,000 eco-bonus at purchase (until June 30), it requires a significant budget increase compared to its thermal equivalent because of its costly 50 kWh batteries. Yet, in insurance comparison calculators, we find a comprehensive coverage quote at €339 per year for the e-208 versus €379 for the combustion version.

A Larger Gap for Sedans

Let’s try this time with two family sedans with similar features. The Tesla Model 3 Performance, with nearly 500 horsepower and a spacious, well-equipped interior (€64,990). And the BMW M340i, with 374 horsepower and similarly generous equipment (€69,600). Not only does the price ratio reverse here, but the insurance quotes provided by comparison tools are still in favor of the electric car. And the gap widens: €608 for the Tesla Model 3 Performance versus €915 for the BMW M340i. Certainly, these differences could reverse if the TSCA tax were ever to return to electric car insurance contracts. And depending on how owners of powerful electric cars behave (whose quick accelerations can quickly lead to dangerous situations), these vehicles might eventually be penalized by insurers. But for now, it seems incorrect to claim that insuring an electric car costs more.

Read also: How does an electric car work?