The Expert Podcast

One of the other factors with purchasing an electric vehicle, new or used, is auto insurance. You want to consider the price of the car, how you're going to use it, maintenance—all that stuff—but also consider insurance. Why would insurance be higher on an electric vehicle? Well, here's why.

Automobile insurance generally covers the vast majority of it: collision damage, liability if you hurt somebody, and theft if somebody steals the car. But mostly, it covers collision damage or physical damage, like if it gets flooded. The most valuable parts of a gasoline vehicle are usually not affected by a collision. The most valuable parts of the vehicle are the engine, transmission, and drivetrain. If a car gets crashed, the engine's protected and probably not going to get damaged. If you have a full-on total front-end collision, the engine's going to be toast, but most collisions are not going to completely destroy the engine. Most times, what about an electric vehicle?

Well, an electric vehicle’s most valuable part is the battery. The battery is not protected in a cocoon in the front of the car; it's actually part of the floor of the car. So any side intrusion or damage from underneath, which can happen if you go over a curb the wrong way, doesn’t even have to happen from an accident, will damage the battery. And if a battery’s damaged, it’s most likely destroyed. Not only is the battery the most expensive part of the car, but it’s much more expensive as a percentage than the engine. The gasoline engine of a standard ICE vehicle might be maybe $7,000 or $8,000, so if you have a $30,000 car, $7,000 is a fifth or a fourth of the value.

If you have an electric vehicle, the battery could be $15,000—half or more of the value of the vehicle. And it's also more subject to damage. You get hit on a side impact, battery’s dead; you go over a curb, battery’s dead; you have a flood that comes up into the battery—it doesn’t have to be that much because it’s the lowest part of the car—the battery is dead. If you have a flood in a gasoline vehicle, even if the flood gets to the engine, the engine’s waterproof. It’s not going to really damage it. You might have to clean it out and maintain it, but it’s not going to completely toast out the engine.

All of those factors are starting to make insurance companies recognize that electric vehicles have a higher risk of having claims that are bigger dollar amounts, bigger numbers. So they're starting to price insurance policies on electric vehicles higher. I don’t think it has anything to do with the use of the vehicles being more dangerous, although they do accelerate faster because they have more torque, so that might be part of it—maybe they get into more crashes. But I think it’s more about the repair cost of an electric vehicle because they really have to make sure that battery is good. Also, the drive engines—they’re electric motors that aren’t underneath the hood in a cocoon; they’re at each wheel. So if you get hit on the side, it could also damage one of the electric motors, which aren’t quite as expensive as the battery, but they could be more expensive.

So definitely check out the insurance quote on an electric vehicle before you decide to buy one to make sure that the numbers still work for you before you dive in and own a car that the insurance is through the roof.

Thank you for watching another episode of Actual Human Advisory on Describe TV. Remember, we have live one-on-one consultation appointments available at actualhuman.com, where you can book a one-on-one undivided attention live call with a licensed investigator, a licensed insurance broker, a licensed mortgage broker, a real estate broker. I’m also a certified real estate title examiner, a certified civil court mediator, along with having developed and started over 15 businesses, several of which were sold for millions of dollars. So if you do have questions in any of those categories, you can arrange a one-on-one live video consultation. Use the link below, and we’ll see you on the next video.