Why do Teslas cost more to insure?

two men up close, holding a clipboard and pen, two cars in the background
mojo cp / Shutterstock

While you’re going to save about $250 a month on gas, any electric vehicle will generally cost you more to insure.

Why is that? Car insurance companies come up with rates based on a whole range of factors. So even if you have a spotless driving record, live in a low-crime area and take advantage of some driving discounts, your rate is still likely to go up compared to your gas-powered car.

That’s because electric vehicles cost more outright and are more expensive to repair. The insurance company may deem you low risk to file a claim, but if anything happens to your car, it’s going to mean costly repairs. So your premiums are set high to reflect that risk.

If your premium with a gas-powered car is $1,000 a year, you’ll probably pay $1,180 to $1,320 with an electric car, according to ValuePenguin. As a luxury car, Teslas are pricier still.

Motortrend has studied how much it would cost each year to insure the various Tesla models available. Among other factors, these averages assume the owner is a single 40-year-old man with a clean record and good credit score:

  • Tesla Model 3: $2,114-$2,351
  • Tesla Model S: $3,673-$4,143
  • Tesla Model Y: $2,118-$2,227
  • Tesla Model X: $3,355-$4,025

And other car companies, including Chevrolet and Ford, are making gains against Tesla in the EV market, so be aware of the potential for higher insurance costs across the brands.

Of course, your rates will vary from insurer to insurer — which is why you should always compare quotes from multiple insurers.

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How do other costs stack up?

Tesla Model S while plugged-in and charging at Supercharger.
JL IMAGES / Shutterstock.com

Most electric cars generally cost more to buy than standard vehicles. And when they’re damaged, you may have a harder time finding a mechanic qualified to repair them — in addition to requiring more expensive and difficult-to-source parts.

Damaged batteries can add to your repair costs. If your battery’s leaking, your mechanic will have to take extra precautionary measures, which will be reflected in your bill.

There’s also the need for a charging station. You should expect to have to pay somewhere in the range of $200 to $1,000 to install your own charging station before you hit the road.

Nevertheless, you can expect your new car to incur lower maintenance expenses overall. Electric cars also don’t need frequent oil changes or replacement radiator hoses, fan belts or gaskets.

So even with slightly higher insurance, your car budget shouldn’t have to change drastically.

Where do I go from here?

Father with son and dog look from the car window
Soloviova Liudmyla / Shutterstock

If you do purchase a Tesla or another EV and begin the process of switching over your insurance policy, don’t forget to ask your insurer if there are any promotions or discounts you can take advantage of to lower your costs.

You may be able to bundle your other policies, like home insurance or life insurance.

Insurance companies often give discounts to safe drivers with clean records. Don’t be afraid to ask in case you’ve missed something in your own research.

But your best option to find savings when you’re looking for car insurance is to shop around for rates. The Insurance Information Institute recommends you seek out at least three quotes before settling on an offer.

Some studies show shopping around can save you up to $1,100 a year on auto insurance.

With that done, you’ll feel all the power of sitting in the driver’s seat even when you’re not behind the wheel.

Compare insurance quotes and save money

Did you know that you could be saving some serious money just by switching insurance companies?

It’s true. You could be paying way less for the same coverage. All you need to do is look for it.

But don’t waste your time hopping around to different insurance companies. Use a website called SmartFinancial to see all of your options at once.

SmartFinancial will provide you with a tailor-made list of possible policies from all major and most relevant insurance carriers.

About the Author

Sigrid Forberg

Sigrid Forberg

Reporter

Sigrid is a reporter with MoneyWise. Before joining the team, she worked for a B2B publication in the hardware and home improvement industry and ran an internal employee magazine for the federal government. As a graduate of the Carleton University Journalism program, she takes pride in telling informative, engaging and compelling stories.

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