Electric vehicles (EVs) have been positioned as the future of driving, cleaner, smarter, and in many cases, cheaper to run than gas-powered cars. But there’s a hidden cost of ownership that EV buyers are running into: insurance.
According to Insurify’s latest auto insurance report, the average American driver is paying about the same for car insurance as last year. EV drivers, however, are seeing a very different trend. Over the past 12 months, insurance premiums for electric vehicles have jumped 16%.
According to Insurify’s latest auto insurance report, the average American driver is paying about the same for car insurance as last year. EV drivers, however, are seeing a very different trend. Over the past 12 months, insurance premiums for electric vehicles have jumped 16%.
The Insurance Price Gap Between EVs and Gas Cars
On average, EV owners now pay $4,058 per year for insurance, nearly 49% more than the $2,732 annual cost for gas-powered cars.
This gap is largely explained by the higher cost of repairing and replacing EVs. Specialized batteries, limited availability of parts, and fewer trained mechanics all add to repair bills. Since insurers price policies based on the cost of claims, premiums for EVs reflect that additional risk.
Tesla Tops the List for Most Expensive EVs to Insure
Not all EVs are created equal in the eyes of insurers. Tesla models dominate the list of the most expensive EVs to insure.
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The Tesla Model X, a luxury SUV, comes with an average insurance cost of $4,765 per year, a 36% increase compared to last year.
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M The Tesla Model 3, while half the price of a Model X, still ranks second-most expensive to insure. Its claims frequency — the likelihood of needing repairs — is 26.95%, far higher than average.
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The Tesla Model Y has an even higher claims frequency at 29.47%, despite being cheaper than the luxury Model S, which comes in at 5.22%.
Overall, Insurify data shows Teslas are about 26% more expensive to insure than comparable EV models.
Where You Live Matters — Insurance Costs Vary Sharply by State
Insurance rates for EVs aren’t uniform across the country. In states with low EV adoption and limited charging or repair infrastructure, the premiums skyrocket.
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Arkansas, Pennsylvania, and Idaho top the list, with EV insurance costing 95–99% more than for gas cars. For example, Arkansas EV owners pay an average of $4,817 annually, compared to just $2,415 for gas cars.
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States like New Jersey and California, on the other hand, show a much smaller gap. In New Jersey, EV insurance costs just 15% more than for gas cars, thanks to widespread adoption, incentives, and growing charging networks.
Severe weather, theft, and vandalism also play a role. States like Florida and Louisiana, which already struggle with hurricanes and fraud-related claims, have some of the highest insurance premiums in the country for all vehicles — and EVs amplify those costs.
Why EVs Cost More to Repair
EVs are technologically advanced, but that comes at a price. Data from Mitchell’s EV Collision Insights report shows EVs cost 22% more to repair than gas-powered cars. They also require nearly twice as many labor hours.
The parts supply chain adds to the problem. Unlike gas cars, where aftermarket and recycled parts are abundant, EV repairs often require original manufacturer parts, especially for high-tech systems like sensors, ADAS features, and batteries.
Batteries are particularly costly. Tesla’s battery packs are integrated into the structure of the car, making them difficult and expensive to repair. That said, battery prices are expected to fall over the next five years, which could eventually help ease insurance costs.
The Role of EV Adoption and Incentives
Insurance costs aren’t just about mechanics and parts — they’re tied closely to how many people in a state or region actually drive EVs. Higher adoption means more specialized repair shops, more available data on claims, and better infrastructure. All of this reduces the risk for insurers.
That’s why policy incentives matter. The soon-to-expire federal EV tax credit — worth up to $7,500 for new cars and $4,000 for used ones — has been a major driver of adoption. Its September 30 expiration could slow EV sales, leaving insurers with fewer claims data points and potentially keeping premiums high.
Millennials and Gen Z, who make up the largest share of EV owners, may be especially affected. For these younger drivers, affordability is often the deciding factor in whether to go electric.
Will Insurance Costs Come Down?
Industry experts believe EV insurance costs won’t stay this high forever. As adoption grows, parts become more available, battery prices fall, and repair networks expand, insurers will have more accurate risk models and better confidence in setting rates.
Adam Bushell of AB Electrical & Communications explains it this way: “Increased adoption increases data, improves risk models, and expands repair networks, which will eventually lower insurance premiums in the long term.”
In the meantime, EV drivers can still lower their insurance bills the same way gas car drivers do — by shopping around, using telematics-based insurance, maintaining a clean driving record, and making the most of discounts.
The Bottom Line
Owning an EV already comes with benefits like lower fuel costs, fewer maintenance needs, and environmental gains. But the insurance gap remains a stubborn obstacle. For now, EV drivers should expect to pay significantly more than their gas-powered counterparts.
The good news is, as EV adoption spreads and technology costs fall, those premiums may eventually catch up with and possibly even undercut traditional car insurance rates. Until then, affordability will remain one of the biggest hurdles for widespread EV ownership in the U.S.
