As costs rise everywhere, cars with cheaper insurance premiums are often sought after as an option to reduce the cost of running a car overall. Car insurance is an essential part of owning a car and without it you can be given a £300 fine and 6 points on your licence or even an unlimited fine and disqualification if the case goes to court.
For many people, electric cars can still lie in the unknown. They can already come with a more expensive price tag when you buy them, although running costs afterwards are generally cheaper, but are they more expensive to insure?
The cost of car insurance can seem confusing. You and your friend could have the same car and be paying completely different amounts for your insurance, which doesn't seem fair at first glance. However, there are many contributing factors that make up the overall cost that an insurance provider will then quote you.
So how are insurance premiums calculated?
In the UK, the Association of British Insurer's Group Rating System scores every make and model of car into one of 50 groups. The cars purchase price, engine power, security features, safety features, and the potential cost of repairs are all taken into consideration.
Generally cars that fall into higher groups have a higher purchase price or are more frequently targeted by thieves so are a higher risk for insurers. The insurance group allocated is essentially a starting point for the premium to be calculated.
The details that you give to an insurer about yourself gives the insurer more information about who drives the car and how, so that the premium can be accurately calculated for that individual.
Your age, address, annual mileage, job, driving history, and how long you've been driving for (amongst other things) all have an impact on your insurance premium. These details allow an insurance company decide the amount of risk they are taking to insure you and your car.
They'll use facts and statistics related to the information that you give them, such as the crime rates in the area that you live, to work out the risk and guide them to the correct premium cost.
Insurers were initially wary to get onboard with electric car insurance as they know that electric vehicles were very different to their petrol and diesel counterparts and that there was much less data about them in comparison.
The higher costs of specialised parts that they need, a minimal amount of trained mechanics to carry out any required work, and the high cost of the battery itself, have been off putting for insurance providers too, as the costs attached to these were unclear.
Electric car insurance policies have historically cost quite a lot more than the same policy for a petrol or diesel car. However from the first quarter of 2021 many mainstream car insurance companies were beginning to report that the gap between these prices were closing, even suggesting that comparable electric cars were cheaper to insure in some cases by the end of the same year.
Despite this, if you are trying to decide between an electric or ICE engine on the same model, the electric will most likely always have a higher insurance quote purely because it's initial cost price is higher. For example, the Jaguar E-Pace sits in group 26 whilst the I-Pace, it's electric counterpart, is in group 50 - the most expensive group possible.
Electric car owners have seen their insurance rates drop year on year, which is great news for anyone considering the switch to an electric car. There are a number of factors that are currently contributing to this, outside of the electric car market expanding rapidly:
Zap-Map estimates that electric car sales in 2021 were up 92% on the previous year, meaning that more garages have had to train to be able to look after your electric vehicle so that they don't get left behind. If there is a claim made on an electric car, there are more options for insurers to use as recommended repairers.
The cost of batteries has decreased drastically since the first electric cars were introduced to the market. This means that although they are still the most expensive part of an electric car, as much as 40% of the overall value, their reduced cost lowers the risk in the eyes of insurers.
With more electric cars on the road, more mainstream insurance companies are now providing policies for them and they have to be competitive to encourage electric car drivers to choose them. Previously you might have had to look for bespoke electric car insurers who dealt exclusively with covering electric vehicles as many insurers felt that there wasn't enough information for their policies.
Shopping around can seem time consuming but is definitely worth doing if you want to make sure that you are getting the best price. Comparison websites will show a large selection of providers and their best prices based on your information but it's also worth noting that some, like Direct Line, prefer you to go to them directly and cut out the middle man.
Also make sure that you're shopping around annually to make sure that you're getting the best deal, especially as the current trend shows these policies becoming cheaper every year.
If you're able to pay your premium annually rather than monthly you can save money too. Paying the balance in full means that you don't pay any interest, which will vary depending on your chosen insurance provider, especially as there are few policies that offer 0% for monthly payments.
A higher excess on your premium will also bring down the overall cost as you are agreeing to pay more if a claim was to be made. However, you have to make sure that it's still an amount that you would be comfortable to pay if you needed to.
Make sure that you provide an accurate number when letting insurers know your annual mileage. Estimating is fine, but the more precise you are the better as then your cost will accurately reflect your usage.
Another known way to take your car insurance cost down is to install a telematics device, or "black box", to your car. The box is fitted to your car and then monitors how you drive in terms of aggressive acceleration and braking, and cornering. Some insurers will offer a discount if you have one of these fitted, as it encourages better driving habits.
Generally, electric car insurance premiums are still going to be higher than those for petrol or diesel cars when looking at a direct like for like comparison. However, comparing electric models year on year sees that these premiums are reducing as more electric cars appear.
It's likely that as even more electric cars arrive on the road, and the closer we get to the UK Government's ban on buying a petrol or diesel car brand new, we'll see the costs fall further to a point where they will be lower than petrol and diesel cars.
