Why is EV Car Insurance Going Up in 2024?

Have you seen a rise in your EV insurance costs in 2023 or 2024? Comprehensive insurance ranks as the second major ongoing cost for Aussie EV owners, trailing only behind electricity expenses. Insuring an EV comes with a heftier price tag—an extra $661 annually on average, based on findings from Drive’s 2023 Ownership Costs survey. But why do EVs cost more to insure? And why are prices going up? We’ve done the digging – find everything you need to know below. 

What You Need to Know:

• EV insurance in Australia costs 20% more than ICE cars.
• Rise in insurance costs may be due to advanced tech, parts scarcity, and repair expenses.
• Performance EVs have even higher premiums due to the luxury factor, and increased “risk”.
• EV popularity and new data may be behind the recent insurance rate surges.
• The competitive insurance market means shopping around for a better deal is a good idea. 
• Higher costs haven’t slowed the shift to EV adoption.
• Premiums may decrease as insurers become more familiar with EVs.

EV Car Insurance Cost Compared

The below figures are based on comprehensive car insurance for one year with: no financing, no mods, private use, assuming 10,000 km driven a year, housed in a garage in Victoria, with a good driver’s record. The excess is roughly $900. 

Insurer	Tesla Y 2024 RWD	BYD Atto 3 2024	Audi Q5
GIO	$2,243	$1,561	$1,982
AAMI	$1,699	$1,188	$1,509
Allianz	$3,196	$2,620	$4,286
QBE	$4,466	$3,364	$6,258
	Avg = $2,901	Avg = $2,183	Avg = $3,508

Out of interest, we also looked at the cost of annual insurance for Tesla’s Model Y Long Range Model. Not technically a performance model by most standards, it seems insurers classify it as a performance car (evident by the cost of insurance). 

Insurer	Cost (Annual)
GIO	$2,842
AAMI	$2,146
Allianz	$3,399
QBE	$4,682
	Avg = $3,267

How We Chose These Cars to Compare (& Insurance Providers) 

We settled on comparing the Tesla Model Y RWD, BYD Atto 3, and the Audi Q5 because these models offer a clear picture of the current Australian car landscape. The Tesla Model Y RWD leads the pack as Australia’s favourite electric vehicle, with the BYD Atto 3 quickly gaining traction and popularity. As for the Audi Q5, it stands as the most comparable internal combustion engine (ICE) vehicle to the Tesla Model Y in terms of market segment and customer choice. This comparison helps us understand the insurance market across a spectrum of choices available to Australian drivers.

We chose these four insurers because they offer policies for all the cars we’re looking at: Tesla, BYD and Audi. Interestingly, there are several prominent insurance companies (e.g. QBE, ING) that do not offer cover BYD just yet  – perhaps since it’s a bit newer on the scene. 

Why is EV Insurance So Expensive? 

There are a few reasons why EV car insurance is higher than petrol and diesel car insurance:

Technological Complexity & Sourcing Parts 

Electric cars use more advanced tech, including their batteries and motor parts. If these get damaged, replacing them or fixing the car can get pricey, mainly because these parts often have to be brought in from overseas. Also, there aren’t as many shops or mechanics trained to work on EVs, which means a damaged car might need to travel farther for repairs, adding to the cost.

Supply and Demand

As more people want EVs, the demand goes up. But there’s a catch – there aren’t enough EVs or their parts to go around. This scarcity can make everything more expensive, including insurance.

Repair Costs 

The advanced technology in EVs doesn’t just bump up their purchase price; it also makes them costlier to repair. Since they’re newer and have more complex systems, the insurance price goes up to match the higher repair costs.

(And Why Are Performance EV Models So Much Pricier?) 

Performance EV models ramp up the insurance costs even further. These high-powered machines are often at the top end of the market, both in performance and price. Think faster acceleration and higher speeds, which can be risk factors for insurers. Plus, they might use even more specialised (and expensive) parts and tech, leading to higher repair bills in case of an incident.

Noticed EV Car Insurance Premiums Rising? You’re Not Alone 

There’s been a noticeable uptick in EV car insurance premiums recently, and you’re not the only one seeing this trend. Social media, especially Australian EV / Tesla Facebook groups have countless people sharing stories about their premiums shooting up—some by as much as 50 to 100%.

If you’re seeing your premium jump, it’s a good idea to shop around. With the EV insurance market getting more competitive, there could be better deals out there. It also never hurts to ask your current insurer why the premium has increased and if there’s any way to reduce it.

Playing the Insurance Game (Why It Pays to Shop Around)

Insurance companies have a way of making you feel valued for staying with them over time. They hint at perks and better deals the longer you’re a customer, suggesting that loyalty pays off. However, for EV owners, this isn’t always the case, especially when it comes to insurance premiums. Despite years of loyalty, many find their rates significantly increase, leaving them puzzled and frustrated.

This situation sheds light on an essential truth: insurance is still a business at its core, influenced more by data and risk calculations than by customer loyalty. As the EV market evolves and insurers adjust to new trends and costs, premiums can jump, regardless of how long you’ve been with the company.

So, while it’s nice to feel part of a loyalty program, it’s crucial to stay proactive about your insurance. Regularly comparing rates and not being afraid to switch providers can sometimes be the smarter financial move. It’s about finding the best deal for your needs, rather than staying put out of loyalty.

Is Expensive EV Car Insurance Slowing Down EV Adoption? 

The question of whether expensive EV car insurance is slowing down EV adoption is multifaceted. On one hand, the higher insurance premiums for EVs could be seen as a barrier for some potential buyers. These increased costs might deter those who are on the fence about making the switch from ICE vehicles, especially if they are calculating the total cost of ownership. 

On the other hand, the overall trend towards EV adoption in Australia continues to grow, driven by a combination of environmental awareness, technological advancements, and increasing societal pressure to move away from fossil fuels. Many buyers are motivated by the long-term benefits of EVs, such as lower fuel costs (electricity vs petrol/diesel), reduced maintenance expenses, and the desire to contribute to a reduction in carbon emissions. 

But Here’s the Good News… 

As the EV market matures and competition increases, insurance premiums will likely become more competitive. As insurers accumulate more data on EVs and become more familiar with the risks and costs associated with insuring them, we may see premiums adjust accordingly. Plus, as repair networks expand and the availability of parts improves, one of the key factors driving up insurance costs could be mitigated.

Ultimately, while higher insurance premiums for EVs might present an additional cost consideration for potential buyers, they are unlikely to significantly halt the momentum towards EV adoption. As the market continues to evolve, it’s reasonable to expect that insurance costs will become a less significant factor in the decision-making process for prospective EV owners.

Improve Your Business’s Bottom Line with an EV Charge Card

While insurance premiums may be slightly higher, you can still save and streamline your business’s EV fleet with an EV Charge card. Simplify charging, access extensive networks, track expenses easily, reduce admin time and costs and enjoy streamlined EV charging costs—all while boosting your green credentials. Embrace the future of fleet management today and start saving with an EV Charge Card.