Electric car insurance is very expensive. Sometimes more than gasoline cars. For what?
One of our readers is complaining about taking a huge increase in insurance for his 2023 Tesla Model 3 with all-wheel drive. We are talking about an increase of $1000, compared to an initial bonus of $1200. He shopped around and another major insurer offered him $3,900!
Why is it so expensive? Especially since Teslas, like most electric cars, are renowned for being theft-proof.
Their systems thus make it possible to recognize thieves (thanks to on-board cameras), to find the Tesla quickly in the event of theft and to block access or driving remotely (with the internet connection).
Not just theft
But theft is only one component of car insurance. Location, usage (walking, commuting, Uber), age, gender, driving and credit record influence pricing.
That said, with an electric car, it’s very easy to drive fast. Therefore increasing the risk of accident.
And if the vehicle is damaged, its parts often cost more than those of gasoline vehicles, because of advanced technologies and materials.
However, electric cars are all equipped with prevention systems, such as lidars, cameras and artificial intelligence which produce alerts and, often, correct the trajectory, reduce speed or apply the brakes to avoid collisions.
So, if insurers rely on their risk experience to set their rates, what’s the problem? It is multiple.
Several vehicles offer autonomous or semi-autonomous driving. Insurers consider this exposes them to a costly risk in terms of civil liability. On the other hand, battery fires pose a risk of contamination (although gasoline models burn much more than electric ones, according to various studies).
Lack of parts
Just like gasoline cars, the lack of spare parts complicates the work of repairers. An damaged vehicle can wait a long time in the garage, which increases the costs of replacement vehicles, ideally electric, and therefore more expensive (but insurers cap these compensations).
Even though the price of remanufactured parts is lower, those for electric vehicles are rare or simply not available. And some manufacturers prohibit them.
The other problem is the labor crisis. Mechanics and body repairers with electrical training are becoming rare. Very rare in some areas. And you have to adjust the digital parameters for each repair.
In addition, some manufacturers only do business with certified garages, Tesla in particular. Which accentuates the effect of scarcity. Capitalism 101: what is rare comes at a higher price.
Advice
- Once you have set your sights on a car model, whether electric or thermal, contact your insurer before purchasing or renting it.
- Do your calculations: if you keep your vehicle for more than three years, it is still often more economical than a comparable gasoline vehicle. Use the CAA calculation tool: carcosts.caa.ca/en.
- Increase your deductible (what you pay out of your pocket in the event of a claim) to reduce the premium. Avoid making claims a few dozen or hundreds of dollars above this deductible.