Skip to main content
Ratehub logo
Ratehub logo

How Much Does Insurance Cost for an Electric Car?

Ratehub logo

Transportation is one of the leading causes of pollution, so it’s no surprise that the popularity of electric vehicles is on the rise. However, there are many factors to consider when choosing to make the switch and drive electric - one being the price of insurance. Does protecting the environment cost too much?

What is an electric car?

An electric car is a vehicle that uses an electric motor and batteries to function, instead of gas. These cars can be charged and recharged using either a wall outlet or a charging station.

NOTE: Most electric vehicles come with a charger that doesn’t need a charging station and works with a standard wall outlet, but many people upgrade to a full charging station for faster charging A charging station can range from a few hundred to over $1000 dollars, and you’ll likely need to pay another $1000 or so to have it professionally installed.    

There are mainly two types of electric-run vehicles: all-electric cars and plug-in hybrid-electric cars. All-electric cars run solely off their battery while plug-in hybrid-electric cars (PHECs) can run on an internal combustion engine using gas after the battery has run out. 

Like driving any car around in Canada, you’ll need auto insurance for your electric car to protect yourself and your investment in your new car. 

What type of auto insurance do I need for an electric car?

Auto insurance for an electric car is far simpler than you think. The basic requirements of insurance for your electric vehicle are the same as any other car. In Canada, the mandated standard policy includes:

  • Third-party liability insurance: protects you financially from claims of third-party damage, including property damage, bodily injury, and death 
  • Accident benefits insurance: protects you financially if you, your passenger, or a pedestrian you hit needs medical benefits, such as physiotherapy or income replacement.
  • Uninsured auto insurance: protects you financially if you’re in a hit-and-run accident or the other driver is uninsured 
  • Direct compensation property damage (DCPD): provides financial compensation for your damaged vehicle, its contents, and the loss of use of your damaged vehicle (AB, ON, QC, NB, NS, PEI)

After you purchase the mandatory coverage, you can also choose add-ons, such as collision insurance, which protects your car while it’s moving, and comprehensive insurance which protects your car while it’s parked from things like fire or flood. The added protection is always a good idea if you want the best car insurance for electric vehicles, as it could cost a lot to repair out-of-pocket without any coverage. 

Like with any vehicle, you can also add auto insurance endorsements to enhance your policy, including loss of use coverage and accident forgiveness insurance

Electric car insurance factors to look out for

Driving an electric car comes with unique risk factors, so be sure to ask your insurance broker for any special coverage options. For example, some providers could extend your liability to cover any tripping accidents from your charging cable at a public station. You should also update your home insurance policy to cover your at-home charging station (if you bought one). 

How much does it cost to insure an electric car?

An electric car insurance rate is calculated in the same way as any other vehicle. Insurers offer premiums on a case-to-case basis, taking into account driver-specific factors and vehicle-specific factors. 

Driver-specific factors include:

  • Demographics (gender, age, and location)
  • Years of driving experience and license class
  • Driving history (tickets, convictions, and accidents)
  • Vehicle use (commercial or non-commercial)

Vehicle-specific factors include:

  • Make, model, and car value
  • The cost to repair or replace 
  • Where or how the vehicle is stored (eg. garage or street)
  • How often or how far the vehicle is driven

Obviously, driver-specific factors will differ for each person, but an estimated cost of auto insurance can be made for different electric car models. Below, we outline the lowest cost of insurance for six popular electric cars, using a 35-year-old female with a clean driving record, looking for auto insurance in Toronto, as a basis. The potential package includes $1 million of liability coverage and a $1000 deductible for both collision and comprehensive coverage.

Electric Car Model

Annual Auto Insurance Premium

Tesla Model 3 Standard Range Plus (2021)

$1,716

Chevrolet Volt (2019)

$1,560

Toyota Prius (2021)

$1,523

Toyota Mirai (2020)

$1,441

Nissan Leaf S Plus (2021)

$1,427

Chevrolet Bolt (2021)

$1,396

Hyundai Ioniq Essential Hybrid (2021)

$1,330

 

NOTE: Green vehicle discounts have not been applied to the annual insurance premiums. 

Remember, these are estimates. Each person has a different set of factors that will impact their auto insurance premium. For example, if you’re a new driver or you’ve been in a few at-fault accidents before, then you would be paying more for insurance as a higher-risk driver. To determine the exact cost you’ll be paying for electric car insurance, you can use our car insurance quote calculator and find the best rates in a few minutes.

Are you paying the best price for car insurance?

In less than 5 minutes, you can compare multiple car insurance quotes from Canada's top providers for free.

Is it more expensive to insure an electric car?

It depends. Insuring an electric car can be more expensive than insuring a regular fuel-powered vehicle, but that’s not always the case.

You might find your auto insurance premium rising simply because electric cars generally cost more to repair or replace. This is because some parts cost more and require specialized mechanics licensed to work on electric cars. Additionally, the battery in an electric car can be damaged during an accident which increases repair costs substantially – the battery can cost thousands of dollars because of the rechargeable lithium-ion while a gas car battery wouldn’t cost more than a few hundred. 

On the other hand, driving an electric vehicle can also come with discounts on auto insurance. 

Many electric cars have safety features, such as an automatic braking system, that can help lower insurance premiums because it lessens the risk of a claim. Some auto insurance companies also offer a green vehicle discount which can help you save on your insurance. For instance, Aviva provides an automatic emergency braking discount of up to 15% and a green vehicle discount of up to 5% for electric vehicles, so be sure to call your insurance company to ask about any cost reductions. 

It’s likely that the expenses and discounts balance out more or less and you’ll end up paying an amount that isn’t significantly higher or lower than a gas-powered vehicle of similar value. 

The cost factor of an electric car

When purchasing an electric car, insurance isn’t the only factor you need to consider – there are a few other factors that influence the cost of owning an electric car.

Gas

One of the main benefits of owning an electric car is saving on all that gas money, but how much do you actually save? It certainly depends on how much you plan on driving the car, but on average, it costs between $175 and $630 to charge an electric car each year while gas money for the year ranges from $1,100 to $2,100. This means you could save anywhere between $470 and $1,925 without having to fill up your gas tank. 

Government incentives

The Canadian government also offers incentives for all-electric and hybrid-electric vehicles. In an effort to get more zero-emission vehicles on the road, you can get a tax credit incentive of up to $5,000 for battery-electric, hydrogen fuel cell, and longer-range plug-in hybrid vehicles. Shorter range plug-in hybrid vehicles have a $2,500 incentive. Some provinces also offer their own incentives for driving green, like British Columbia’s rebate of up to $3,000 and Quebec’s rebate of up to $8,000 on select electric vehicles.  

Batteries

Electric vehicles also come with different expenses than a traditional car, such as battery replacements and charger installations. After the warranty period of either 8 or 10 years, the battery of your electric vehicle needs to be replaced at an average cost of $10,000, and you might need to purchase a Level 2 charger for your home. Level 2 charging stations are more efficient and powerful than the charger that comes with your electric vehicle (Level 1), and getting a certified electrician to install it can add an extra few thousand dollars to your plate. 

The green factor of an electric car

Driving an electric car might eliminate the need to stop for gas, but it doesn’t eliminate your carbon footprint entirely. With some car batteries packing up to 10 times the amount of energy that the average household uses daily, it pretty much comes down to the source of your energy. 

About half the energy in Ontario comes from nuclear power while Quebec gets the majority of its energy from renewable sources, including hydro, wind, and biomass. In Alberta, however, the primary source of energy comes from coal, so operating an electric vehicle there might not be as sustainable as you had hoped. 

However, according to an article from CBC, Jennifer Dunn at Northwestern University's Center for Engineering Sustainability and Resilience found that driving an electric car with coal-generated electricity is still slightly better than burning gasoline in a conventional car with an internal combustion engine. 

Finally, many electric car batteries are made with metals including nickel, cobalt, and lithium. Specifically, Lithium mining is connected to environmental destruction due to the harsh chemicals they use for extraction and the large amounts of freshwater they consume in the process.

The bottom line

Electric car insurance rates aren’t necessarily more expensive or cheaper than the insurance of a conventional vehicle. The cost of auto insurance is dependent on many individual factors, so you’ll receive a different quote than your friend, even if they’re your neighbour. Aside from insurance, there are also other factors to consider when purchasing an electric car, including the cost of maintenance, government incentives, and the overall environmental contribution of the vehicle.  Will you be buying an electric vehicle?

ALSO READ

The knowledge bank

A wealth of knowledge delivered right to your inbox.

By submitting your email address, you acknowledge and agree to Ratehub.ca‘s Terms of Use and Privacy Policy. Contact us for more information. You can unsubscribe at any time.