An Indiana couple are raising questions over why their Tesla insurance costs so much more than their Volkswagen insurance.
According to an exclusive report by the Daily Mail, Brent Shreve and his wife Molly purchased a Tesla Model Y for him and a Volkswagen Atlas for her back in April.
They reportedly paid roughly the same price for both: $53,000 minus a $7,500 electric vehicle (EV) tax credit for the Tesla, and $46,000 for the Volkswagen.
Here’s the problem: “Despite the models being almost-identical in size and costing virtually the same price, the couple were horrified to discover the insurance premiums on the Tesla were double that of the Volkswagen,” the Daily Mail notes.
State Farm reportedly gave them quotes of $78 for the Volkswagen and a whopping $140 for the Tesla.
— Adam Warden (@Adam_and_EVs) September 15, 2023
“I had been reading on a lot of Tesla forums that people were getting high quotes. I assumed it would be higher, but not double,” Shreve told the Daily Mail.
But this is no anomaly.
“DailyMail.com analyzed data from insurance comparison site The Zebra and found that in various scenarios the approximate cost of insuring an electric car was more than the gas alternative,” according to the Daily Mail.
Lynne McChristian, the director of the Office of Risk Management and Insurance Research at the University of Illinois at Urbana-Champaign, told the Daily Mail that there are valid reasons why for EVs generate higher premiums.
For example, there isn’t enough data out there yet for insurers to properly gauge the “expected losses.”
“Insurance is a data driven business. Insurance companies have had data on expected losses for auto insurance on gas-powered vehicles for decades. The data for electronic vehicles is more limited because their history isn’t as long,” she said.
“As we get more electronic vehicles on the road it is very well expected that the cost of their coverage will come down,” she added.
Also, EVs can cost a lot more to repair.
“If an electric vehicle is involved in a car crash, the likelihood of it being declared totaled is sometimes greater than a gas-powered vehicle because the cost of that battery can be half the price of the car. That’s where the cost comes in,” McChristian explained.
“EVs are in the repair shop for longer than a gas-powered vehicle. This longer repair time can be due to supply chain issues or the need for more complicated electronic diagnostics by specialized technicians,” she added in separate remarks previously made to Consumer Reports.
Look at how the car insurance rates for EV and hybrids are rocketing. The cost of repairs, battery ignition, possible write off all higher so premiums up. ICE rates not going up at the same rate. They’ll stop you driving one way or another.
— Boombastic (@67Boombastic) September 13, 2023
The only potential good news is that the insurance premiums for EVs have very slowly but surely been declining overall as time passes and the insurance companies gather more data.
Likewise, gathering more data is becoming easier as more and more Americans purchase electric vehicles.
“According to the International Energy Agency, EV sales were strong in the first year of the pandemic and continued to rise through 2021 and 2022, even as new-car sales began to drop off due to supply chain problems and production delays,” Consumer Reports notes.
“Also keep in mind that many manufacturers have announced plans to increase electric vehicle production, and several new electric models are scheduled to appear in the U.S. market over the next couple of years. More EVs on the roads means more data on them, which will enable insurers to have a better idea of how risky they are to insure. It’s also likely to bring down the cost of parts for repairs and broaden the availability of qualified repair technicians,” according to Consumer Reports.
Furthermore, despite EV repairs costing more upfront, over time their costs are reportedly actually less than the costs associated with traditional cars.
“A … study published in 2020 examined vehicle maintenance and repair costs over years of ownership and found that overall they were less for EVs than for equivalent gasoline-powered vehicles,” according to Consumer Reports.
“Fueling costs—how much you’ll spend charging a car as opposed to putting in gasoline—are lower, too. As more EVs show up in driveways, they will probably cost less to build than they do now, which will translate into lower prices to buy.”
I drive a hybrid car, fill up my gas tank every 3 months. That’s cheaper in the long run. What’s not to like about hybrids and EVs.
— Ida Collado (@IdaColl_11) September 15, 2023
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