Electric cars almost 50 per cent more expensive to insure, study says

10/03/2024 02:00 PM

Electric cars are almost 50 per cent more expensive to insure than their petrol-powered equivalents in Australia, new research claims.

A study of 12 insurers carried out by comparison site Compare the Market, has shown the top five best-selling electric vehicles (EVs) are 43 per cent more expensive to cover than similar internal combustion-engined models.

The latest research by the company shows many motorists choosing an EV were facing higher premiums in the first half of this year, based on quotes generated in early September with a 1 October start date.

Across the top five best-selling EVs and 12 car insurance providers, motorists could be spending between $98 to $1788 more to comprehensively insure an EV every year – which may diminish some of the benefits of reduced running costs.

Similarly, the most popular hybrid vehicle are typically 5 per cent pricier for comprehensive car insurance compared to their petrol-only counterparts.

MORE: Car insurance premiums jump 16 per cent in 12 months – report

"There are already a number of EVs that are priced on par with some petrol-powered models – but insuring an electric car could cost considerably more than insuring a similar petrol-powered model," Compare the Market's economic director, David Koch, said.

According to the study, a Tesla Model Y RWD costs $3434.98 to insure, compared to a Toyota RAV4 Cruiser 2WD which sets owners back $1744.95 – a difference of almost 97 per cent.

Similarly, a Tesla Model 3 RWD costs $3888.55 compared to an Audi A3 35 TFSI sedan which is $2101.04 – a difference of 85 per cent.

"EVs are generally more expensive to insure because the battery pack creates more complexity for repairers, many EV-specific parts need to be imported from overseas, and there are fewer qualified smash repairers for electric cars," Mr Koch added.

"Therefore, if you're an existing or would-be EV owner, it pays to compare car insurance policies to ensure you don't pay a cent more than you need to – rather than staying loyal with the same insurer year-on-year.

MORE: Electric cars Australia – Cheapest, best and newest electric vehicles (EVs) and hybrids

"Just like banks and lenders have started offering green car loans, it would be great to see insurers adopt some green discounts for electric car premiums.

"For now, the best way to ensure you're getting a good deal is to compare."

The research undertaken by Compare the Market was based on having a comprehensive car insurance policy for a 34-year-old male driver living in Brisbane, who drives 15,000km per year (for private use or commuting to work only) with a clean driving history, owns a home with a garage, does not own another vehicle, and is employed full-time.

The quotes were based on a targeted $900 excess with no optional extras, no driver age restriction, and policy commencing on 1 October 2024. Where an insurer did not offer a $900 excess option, the closest amount within $50 was selected.

The vehicles quoted were all manufactured in 2024 – except for the Hyundai i30 N Line where 2023 was used as some insurers don't yet offer cover for the 2024 model – were white in colour, with no options or modifications, no finance, and had no damage.

Earlier this year, Drive reported that, after electricity costs, comprehensive insurance is the second-biggest ongoing expense for Australian EV owners, according to Drive’s 2023 Ownership Costs survey. 

And it’s not just a problem in Australia, with UK EV owners also reporting soaring insurance costs. 

The Insurance Council of Australia says the higher cost of EV insurance is down to a range of factors, from the expense of imported parts and electric car batteries to the dearth of electric vehicle service centres and qualified EV repairers. 

“EVs are typically more expensive and have more complex systems and components, specifically motor parts and batteries, than other vehicles,” a spokesperson for the Insurance Council of Australia told Drive. 

“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 costs and is therefore reflected in higher insurance premiums.” 

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