As the UK drives towards an all-electric future, understanding the total cost of ownership has never been more important. Car insurance is an essential and significant part of your running costs. Driving without it can lead to a £300 fine and 6 penalty points, or even an unlimited fine and disqualification if the case goes to court.
For many drivers, the costs associated with electric vehicles (EVs) can seem uncertain. While they often come with a higher initial purchase price, their lower running costs are a major draw. But does this advantage extend to insurance? Let's explore the current landscape of EV insurance in 2025.
The cost of car insurance can seem complex. You and a friend could own the same car yet pay vastly different premiums. This is because insurers use a wide range of factors to assess risk and calculate the final price.
So how are insurance premiums calculated?
In the UK, every new car model is assessed to determine its risk profile. For many years, this was done using the Association of British Insurers' (ABI) Group Rating system, which placed cars into one of 50 groups. This system is still used for cars launched before August 2024.
For new cars launched since then, a more detailed Vehicle Risk Rating (VRR) system is being phased in. Both systems consider factors like the car's purchase price, performance, security features, and the potential cost and complexity of repairs. Generally, cars in higher groups or with higher risk ratings cost more to insure.
The personal information you provide allows an insurer to build a picture of who is driving the car and how it will be used.
Your age, address, occupation, driving history, and annual mileage all have a significant impact on your premium. Insurers use statistics related to this information, such as crime rates in your area or accident data for your age group, to calculate the level of risk they are taking on.
Historically, insuring an electric car was significantly more expensive than insuring a comparable petrol or diesel model. While this gap is narrowing, several factors mean EV premiums can still be higher.
Insurers were initially cautious due to a lack of long-term data on EV performance and reliability. As more data becomes available, other cost drivers have become clear:
Despite these challenges, the great news for anyone considering an EV is that insurance premiums are on a downward trend. Data from Confused.com shows the average EV premium fell by 10.3% between late 2024 and mid-2025 alone. Several factors are driving this change:
Regardless of whether you drive an electric, petrol, or diesel car, there are several proven ways to lower your insurance costs.
While insurance is a key factor, it's only one part of the total cost of ownership. When you look at the bigger picture, the financial case for EVs becomes much stronger.
Although accident repairs for EVs can be more expensive, their routine servicing and maintenance costs are significantly lower. Analysis by The Car Expert estimates that over five years, the total servicing cost for an EV is around £4,022, compared to £5,709 for a petrol or diesel car — making EVs approximately 29% cheaper to maintain. This is because EVs have fewer moving parts, no oil to change, and less wear on components like brakes.
The question of whether electric cars are expensive to insure doesn't have a simple yes or no answer. While premiums are often higher than for an equivalent petrol or diesel model due to repair costs and other factors, the gap is steadily closing. Average EV premiums are falling year-on-year as the market matures, competition increases, and repair networks expand.
Ultimately, the best approach is to look beyond the insurance quote and consider the total cost of ownership. The significant savings on fuel, tax, and routine servicing often outweigh a higher insurance premium.
With the UK government committed to phasing out the sale of new petrol and diesel cars by 2030, the transition to electric is well underway. By weighing up all the costs, you can make an informed decision that's right for your wallet and for the road ahead.
