Pineapple Presents… MythBusters: The Electric Vehicle Insurance Edition


May 7, 2024
Team Pineapple

Car insurance has existed for hundreds of years (126 as of 2023, to be exact), and yet the industry remains shrouded in mystery and confusion.

Add Electric Vehicles (EVs) to the conversation, and you have a Minestrone of mixed emotions.

One of the main reasons EV insurance is misunderstood by so many is that people are still unfamiliar with it.

Another is that EVs have unique features that can affect insurance premiums differently than internal combustion engine (ICE) vehicles. 

So, there’s no basis for comparison.

Finally, there needs to be more clarity about the safety and reliability of EVs compared to petrol-powered cars.

This leads to myths about EV car insurance, such as the cost, repair prices, availability, safety and security, and the need for insurance, running rampant amongst the masses.

That’s why we’ve taken it upon ourselves to compile a short list of common myths and debunk them once and for all.

Myth #1: “Electric Car Insurance is Always More Expensive than Petrol-powered Vehicle Insurance.”

This myth is not entirely unfounded; by now, you know that motor insurance tends to cover your vehicle for its full retail value. And electric cars are typically more expensive to purchase than fuel-powered vehicles.

So the assumption is that your insurance will be pricey because your electric car is pricey.

Another assumption is that EVs are more dangerous to drive than fuel-powered cars, leading to higher risk and premiums.

In actuality, several factors influence the price of an insurance policy's premium, namely:

  1. Make and model

Luxury electric cars may have higher insurance premiums due to their higher value and repair costs. Some electric models may also have specialised features or safety ratings that affect insurance premiums.

  1. Driving record

A person’s driving record is crucial to determining the cost of car insurance. Those with a clean record are considered less risky to insure, meaning more favourable premiums. At the same time, those with a history of traffic violations and accidents will pay more for insurance.

  1. Coverage levels

The more comprehensive the coverage, the higher the premium will be. The most basic and affordable insurance policy is third-party liability, but policies like third-party fire and theft or comprehensive may add to the cost.

  1. Location

Where a person lives can also impact the cost of EV insurance. Insurance companies consider factors like the crime rate, weather conditions, and accident and incident rates in an area to determine the appropriate premium price.

Special mention to other factors such as licence age, code, and a driver’s marital status.

So, in some cases, EV insurance can be less expensive than fuel-powered car insurance.

For instance, electric cars have fewer moving parts than conventional cars, requiring less maintenance. 

EVs also have more advanced safety features, like automatic braking and lane departure warnings, lowering the risk of accidents.

And another way EVs can be less expensive to insure is their environmentally friendly benefits, which may lead to lower insurance premiums or discounts from some insurance companies that promote eco-friendly initiatives.

Myth #2: “Electric Cars are More Expensive to Repair, So Insurance is More Expensive.”

While it is true that electric cars have more unique parts (batteries, electric motors, charging systems etc.) that require specialised repairs or replacements, these costs aren’t always higher than fuel-powered motors.

In some cases, EV repairs can be less expensive than repairs for traditional cars thanks to their simpler drivetrain systems and lower maintenance needs.

Unlike fuel-powered cars with various components such as complex internal combustion engines, transmissions, or exhaust systems, EVs don’t have as many moving parts. 

Add to the fact that most EVs have the latest safety protection technology, meaning a lower risk of accidents. 

You’ve got yourself another way this myth is untrue.

The different types of repairs needed for electric cars versus fuel cars:

A table showing The different types of repairs needed for electric cars versus fuel cars

Most insurance companies use the same protocol for repairing EVs as fuel cars. However, there are differences in cost calculations given the unique characteristics of EVs.

For example, parts for an EV can be pretty steep compared to their petrol-powered counterparts, such as charging systems, high-voltage batteries, and electric motors. 

But other features, like brakes, oil changes and transmissions, may be less expensive and require less frequent maintenance.

 And after that, there are also labour costs to consider.

The average mechanic can’t fix an electric car, as they lack knowledge of its specialised parts and unique operating system, which run entirely different to those in a conventional vehicle.

So, insurance providers take into account this need for an expert to perform repairs on your vehicle. 

Overall, while some EV repairs can be more expensive than petrol cars, there can also be insurance discounts due to how low-maintenance EVs are.

Myth #3: “Electric Car Insurance is Hard to Find.”

Ignorance is essentially to blame for this myth's existence and continued perpetuation. 

Some drivers aren’t aware that they can get insurance for their electric cars or that such an insurance policy even exists. 

Insurance companies have been slow to market their EV policies, so many people are under the assumption that they cannot get their vehicles insured.

Another area for improvement is the limited availability of EV insurance.

While there are insurers that offer coverage, others need policies specifically designed for these vehicles. Instead, electric cars may be classified as luxury or high-performance, leading to higher premiums. 

EVs are also relatively new, so people believe electric car insurance is hard to find because they’ve heard misinformation, outdated or inaccurate information. 

Insurers may also need more data or information to determine premiums accurately.

While some drivers might’ve struggled to find insurance for their electric cars in the past, this is becoming less of an issue as more insurers recognise the unique needs of EV owners.

An excellent place to start is comparison shopping between insurance companies.

Some insurers offer policies tailor-made to suit the needs of EVs; you can start by looking into insurance companies that specialise in electric car insurance or work with brokers with a wide range of insurance providers.

If you already have a policy active for a traditional car, contact your insurer to determine whether they offer EV coverage.

In addition to traditional insurance companies, some car manufacturers also offer their own insurance policies. 

The onus then falls on you to research each provider thoroughly, read reviews, and ask questions that’ll help you ensure you’re choosing the right policy for you.

Insurance companies are adapting to the rise of EVs by recognising their distinctive features and offering coverage options that specifically cater to these vehicles.

Other adaptive measures include flexible policies that allow you to adjust coverage based on driving habits and driving needs and discounts and incentives, including telematics devices and having an eco-friendly car. 

Myth #4: “Electric Cars are More Likely to be Stolen or Vandalised.”

The number one reason this myth exists is what is known as the “Novelty Effect”; EVs are seen as shiny new toys and, thus, more vulnerable targets for theft.

Another reason is the incorrect assumption that, since EVs tend to be more expensive than petrol-driven cars, they’re more valuable, leading to them being targeted by thieves.

And lastly, ignorance rears its head again as some people are unaware of the security features included in EVs (alarms, GPS tracking, and immobilisers), which help deter theft and vandalism.  

EVs aren’t immune to being stolen; however, the advanced technology found in one can make stealing one incredibly difficult.

Take Teslas, for example; according to MarketWatch’s Quentin Fottrell, 

“The recovery of stolen Teslas is notable in an industry where the overall recovery rate for stolen vehicles was just 58.4% in 2016. Tesla had a 100% recovery rate that year, thanks in part to its GPS tracking technology.”

And in 2020, the American-based Highway Loss Data Institute (HLDI) reported that the Tesla Model S and Model X had significantly lower theft rates (0.4 and 0.3 per 1000 insured) than most luxury cars (1.6 per 1000).

A similar report by the UK-based environmental group Transport & Environment studied theft rates of 27 electric vehicles and found that none had theft rates significantly different from the average for all car models.

In terms of vandalism, there isn’t enough evidence to suggest that EVs are more likely to be targeted. 

However, there have been several isolated cases of vandalism; some believe electric cars threaten the environment, while others don’t like new technology. 

The exact reason behind these acts is still largely unknown.

Vandals have also been said to tamper with EV stations, charging ports and electrical components.

With that said, motorists should still take the necessary basic precautions to protect their vehicles, electric or not, by parking in well-lit areas and using anti-theft devices. 

Insurance companies assess the risk of theft and vandalism by looking at the make and model of the car, where it's parked, and the individual’s driving history.

The impact these factors have on an insurance policy depends on the specific details of the policy itself, the driver and the car.

Generally, EVs aren’t as enticing to criminals due to their advanced security systems and the lack of a black market for EV parts.

However, this could change in a matter of years.

Myth #5: “Electric Cars Don't Need as Much Insurance Coverage as Petrol Cars.”

We saved the best for last; this one is the most outrageous and wildly inaccurate of all the myths on our list.

All precious valuables are at risk of theft, damage or loss. Insurance exists to mitigate the financial fall-out from the formerly mentioned risks.

So, yes, your electric car does need insurance, maybe more so than petrol cars.

EVs come with an expensive price tag, meaning the cost of repairs and maintenance might be higher in the event of an accident. They also require specialised parts and repair techniques, further increasing prices.

Those specialised parts and unique features, such as the high-voltage battery, can lead to fire and explosives should an accident occur.

EVs are no different to petrol cars; the same insurance policies you’d consider for your traditional vehicle are available as coverage options for your electric ride – just with a few more particularised bells and whistles.

In South Africa, most insurance providers typically offer the following three types of car insurance policies:

  1. Comprehensive car insurance.
  2. Third-party (or liability) only coverage.
  3. Third-party Fire and Theft.

The saying ‘you get what you pay for’ rings true regarding Comprehensive insurance, which protects against collision and non-collision-related accidents (think theft, fire or natural disasters).

Third-party-only coverage protects others from damages caused by you to their vehicles and property, as well as bodily injuries or even accidental death resulting from an accident.

However, this policy does not protect you and your vehicle and property.

And finally, Third-party Fire and Theft… well, that one’s self-explanatory.

Most insurers also offer coverage like credit shortfall, strictly for newer vehicles financed by a bank or financial institution. It covers the difference between your car's retail value and how much you paid for it, i.e. the amount you owe on your loan.

Ultimately, EVs and ICE cars need the same types of coverage because both are susceptible to the same risks and potential losses, including accidents, theft, damage from natural disasters and liability.

In summary

The myths we debunked in this article are just that – myths. 

Myths can be powerful and influential, shaping people’s beliefs, behaviours and attitudes. They can also be difficult to dispel, especially if they’re deeply ingrained in society.

But at the end of the day, an important thing to remember about myths is that they’re baseless misconceptions that aren’t grounded in any truth and exist despite evidence to the contrary.

So, the next time you come across any of these myths,

  • “Electric car insurance is always more expensive than gas car insurance.”
  • “Electric cars are more expensive to repair, so insurance is more expensive.”
  • “Electric car insurance is hard to find.”
  • “Electric cars are more likely to be stolen or vandalised.”
  • “Electric cars don't need as much insurance coverage as petrol cars.”

Simply shake your head and laugh because we know you know better after reading the information provided.

Understanding what’s true and untrue and the realities of EV car insurance is vital for someone with an electric car or considering buying one. 

It helps prepare you for what’s to come.

This knowledge also protects you from financial losses and enables you to make intelligent, informed decisions about your coverage needs.

Get a car insurance quote now!

Please Note: The information provided above is for informational purposes only; you should not construe any such information as legal or financial advice.

Pineapple (FSP 48650), is underwritten by Old Mutual Insure, a licensed FSP and non-life insurer. T&C’s apply. Premium is risk profile dependent.

Team Pineapple

Team Pineapple comprises our company’s top talents, who are dedicated to creating clear, high-quality content on essential vehicle insurance topics. This diverse group, including actuaries, accountants, data scientists, and insurance professionals across South Africa, collaborates to produce enlightening and empowering articles.

Each piece is thoroughly researched, factually accurate, and rigorously reviewed to ensure quality.

*We say they’re the finest because we want them to keep writing for us!

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Please Note: The information provided above is for informational purposes only; you should not construe any such information as legal or financial advice.

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