Why is electric car insurance so expensive? EV vs ICE cost analysis

We look into claims that electric cars face higher insurance premiums than ICE equivalents

BMW iX3

It sounds like bad news for electric car drivers: headlines in newspapers claim owners are being quoted up to £9,000 to insure family SUVs, and are having to pay thousands more to get cover compared with drivers of petrol and diesel (ICE) cars.

Even the experts have rung alarm bells. Comparison site Confused.com says the average EV insurance quote has soared by 72 per cent in the past year. Big names such as John Lewis have even suspended sales of policies covering electric cars.

But is there really any truth behind the headlines? Insurance costs have risen across the board in the past year, but are the prices for electric cars really that much higher than ICE equivalents?

To find out, we got quotes for three drivers from Confused.com. For each we compared the cost of cover on electric and petrol or diesel versions of the same car – a Vauxhall Corsa, MG ZS and BMW X3. We then took the average of the five cheapest prices offered.

The results reveal that the cost of insuring these electric cars is indeed higher, but the difference is not as substantial as the headlines would suggest. The EV was actually cheaper to cover for one of our drivers.

Taken as an average across the board, the quotes given for the MG ZS EV were 10.4 per cent more than the 1.0-litre turbo petrol model, while the Corsa Electric’s were 16.6 per cent higher than the equivalent 1.2T 130 petrol version. Drivers choosing the electric BMW iX3 will pay a more significant 20 per cent premium over the diesel X3.

But it seems that certain best-selling electric cars are pulling up the overall average for EVs, with Tesla in particular being shunned by some brokers entirely, making them expensive to insure. Owners are shocked to discover most of the
Tesla range is placed in insurance group 50 – the same as exotica such as Ferraris and Lamborghinis.

We gathered quotes for a Tesla Model 3, and the prices were surprising. For example, our fictitious 46-year-old accountant from Colchester, Essex, with five years’ no-claims bonus would be faced with a £2,427 annual premium – compared with £1,022 for a petrol Audi A4 2.0 TFSI. The average of quotes across our drivers was a massive 87.57 per cent higher for the Model 3 than for the A4.

According to experts, this is for a variety of reasons. Louise Thomas from Confused.com said: “We are seeing fewer insurers offering policies for EVs than other cars, which can mean pricing is less competitive.

“It could be down to the level of risk associated with EVs,” she said. “For example, they generally have faster acceleration, which means a higher risk of being involved in an accident. This, coupled with expensive repairs, means that they could have a significant financial impact on insurers.”

According to the Tesla Owners’ UK group, the American manufacturer is closely monitoring insurance prices and taking steps to reduce repair costs on its models.

The brand has introduced its own insurance to cover cars in the US, but currently there are no plans to offer the same arrangement in the UK.

Our results: what we uncovered

Average premium from cheapest five quotes for comprehensive cover with similar policy features, eg: including windscreen/courtesy car/legal cover, but excluding breakdown cover.

 Female (28), 3yrs NCB, Teacher, Clean licence, PlymouthMale (46), 5yrs NCB, Accountant, 3pts (speeding), ColchesterMale (65), Max NCB, Retd. director, Clean licence, Middlesborough
Vauxhall Corsa 1.2T 130 GS 5dr auto £479 £493 £310£479£493£310
Vauxhall Corsa Electric 100kW GS 50kWh auto£537£554£404
    
MG ZS 1.0T GDi Exclusive DCT/auto£522£522£368
MG ZS EV SE£617£596£348
    
BMW X3 xDrive30d M Sport£1,023£888£812
BMW iX3 M Sport£1,232£1,002£1,037
    
Audi A4 2.0 TFSI 35 Technik£974£1,022£636
Tesla Model 3£1,193£2,427£1,314

Click here for our guide on electric car running costs...

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