Are electric cars really that much more expensive to insure?

02/08/2025 01:00 AM

After a record 2024 that saw 91,292 electric cars find new homes – up 4.7 per cent from the 87,217 recorded in 2023 – it seems like more Australians are comfortable adopting battery-powered cars into their garages.

With more affordable electric vehicles entering the market, the price barrier between electric vehicles (EVs) and traditional petrol and diesel cars that once held back consumers is eroding, with buyers having more options than ever before.

RELATED: How one occupation could make or break EV success in Australia

However, according to an EV and hybrids insight report published by the Australian Automotive Dealer Association (AADA) that surveyed 2000 drivers, EV insurance and high repair costs remain a key issue that’s preventing some consumers from making the electric transition.

But are EVs really that much more expensive to insure in 2025? To find out, Drive crunched the numbers between the most popular internal combustion engine (ICE), hybrid and electric models across different vehicle classes and compared their estimated comprehensive insurance prices for a 12-month policy.

For this comparison, the hypothetical driver profile Drive used to obtain these estimated prices is a 35-year-old male with a clear history, who keeps his vehicle in a garage and resides at an address in Chatswood, New South Wales.

Additionally, there is no finance owed on his personal car, while the excess is set at $1000 and the sum insured is of market value.

Note: the prices listed in this article are an estimation only. Insurance costs vary greatly depending on an individual driver's circumstances.

Why are electric cars more expensive to insure?

Insurers claim EVs are typically more expensive to cover due to their complex systems and parts, supply limitations, as well as a severe labour shortage in the maintenance and repair industry.

"EVs generally have a higher vehicle value, and given the technological components of these vehicles and specialist skills required, they cost more to repair – which in turn means they cost more to insure," a Suncorp Insurance spokesperson previously told Drive.

Marni Jackson, Head of Product (Vehicle) at YOUI Insurance, said replacement part shortages are a challenge that’s causing problems when it comes to fixing electric cars.

"We don’t always experience delays and challenges, but when we do, it’s caused by the limited availability of parts or time it takes to source the right part, and the availability and proximity of authorised repairers," Jackson explained.

Shaneen Marshall, the Chief of Strategy and Technology at Zurich Australia – Australia's Tesla-backed insurer – said Tesla cars typically fetch higher insurance costs "not [because] it's an electric vehicle, it's just a higher-tech car and you would see the same cost of replacement when you have cameras and sensors on Mercedes and BMW [models], for example".

"The fact that electric vehicles are more technologically advanced and have more sensors and cameras… the cost of insurance isn't the result of it being an electric vehicle, it's the result of the type of car you're buying," she added.

Further compounding the high cost of electric car insurance is a severe labour shortage within the maintenance and repair industry.

"There are fewer repairers trained and authorised to work on EVs, but this network is growing. Labour shortages within the automotive sector are also a concern contributing to delays [in repairs] and this is not isolated to EVs," Jackson told Drive.

Similarly, an Insurance Council of Australia (ICA) spokesperson explained, "repairing EVs requires importing parts to Australia, and there are few EV service centres and speciality tradespeople to fix any damage, which may mean damaged vehicles would have to be transported for repair."

"All this adds to repair cost and is then reflected in higher insurance premiums," an ICA spokesperson told Drive.

While electric cars were sold in record volume in 2024, the latest January sales data revealed a softening EV market in Australia as more consumers opt for hybrid models.

The 3822 EVs sold in January is down 21.7 per cent compared to the same month last year, with battery-powered cars accounting for just 4.7 per cent of the 87,625 total market share – the lowest percentage recorded in years.

Stavros Yallouridis, CEO of the Motor Traders’ Association of New South Wales, said in a media statement that the latest sales data highlights that the "barrier to EV adoption isn’t just the purchase price anymore – it’s the whole ownership experience, including servicing and repairs.

"We identified back in 2022 that NSW alone needs 49,000 workers trained in EV servicing and repair. Now, looking at these latest consumer sentiment figures, the urgency is even clearer. The industry is ready to step up, but we need the government support to fast-track this training.

"Without it, high repair costs will continue to be a major barrier to EV adoption," Yallouridis added.

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