EV Auto Insurance in Illinois

Feb 21, 2023

What do you need to know about electric vehicles (EVs) and auto insurance? In 2021, EVs made up 3.2 percent of the light vehicle auto market, according to the U.S. Bureau of Transportation. If you're one of the growing number of Americans choosing to go all-electric, take a look at what you need to know about auto insurance.

Do You Need Auto Insurance for an EV?

Yes, you do need to insure your electric vehicle. Even though the energy that powers your EV is different from a traditional gas-powered car, the insurance requirements are still the same. All states have some type of minimum auto insurance regulation or requirement.

Illinois drivers must have liability insurance that includes injuries or property damage coverage that you might cause as a result of an accident. A qualified insurance agent can help you to understand the minimum coverage requirements and any changes that the state could make.

Will Electric Car Insurance Cost More?

There's no guarantee that you will pay more or less to insure your EV compared to a traditional gas-powered or hybrid vehicle. But in general, many electric vehicles will cost more to insure. 

Along with the EV category, the make and model of the car, your driving history, claims you may have filed in the past for other vehicles, your age, your overall driving experience, your credit score, the type and amount of coverage you select, the deductible, and your geographic region will also affect the price you pay for auto insurance. These factors impact both gas-powered and electric vehicles.

Why Might Insurance for an EV Cost More?

Right now, most EVs cost more than similar types or models of gas-powered cars. In September of 2022, the average price for a new EV was $65,291, according to Kelly Blue Book. Gas-powered cars averaged $48,094 in the same month and year. The more expensive a car is, the more you may need to pay for the insurance premium.

Not only will the total purchase price of the vehicle factor into a potentially higher premium, but the insurance company may also need to charge more based on the estimated cost of replacement parts and repair.

Unlike gas-powered vehicles, EVs don't always have easy-to-find parts that are readily available. Chances are you can't go to just any collision or repair shop to get an electric vehicle repair. Instead, you may need to visit the dealer or a specialized service center.

A specialized service center or collision auto body shop that works on EVs could charge more. The knowledge, skills, training, and time necessary to repair these more complex vehicles can result in a higher price. This means the insurer would need to pay more for accident or incident-related repairs for your car than they would for a similar model gas-powered vehicle.

Does Every Insurance Company Offer EV Policies?

Most insurance companies provide EV insurance. Again, you will have to comply with your state's minimum insurance policy regulations. If you have concerns about finding insurance for your soon-to-be new EV or finding a lower-cost policy, talk to an agent before you buy or lease a car. 

A qualified insurance agent can review the options and help you to understand the price you could pay for insurance premiums. Along with the car itself, the agent will need to review your driving history and other factors (such as your age) before they can provide you with an estimated price. 

Can You Lower the Cost of EV Insurance?

Yes, you could potentially lower the cost of your EV premium. Like gas-powered vehicle insurance, low deductible policies have higher electric vehicle insurance premiums. The higher your deductible, the less you will pay per month and year. 

Even though a higher deductible policy could save you money in the cost of your premium, it isn't always the best option — especially with the potential for high-cost EV repairs. The deductible is the amount of money you're responsible to pay after an accident or auto incident.

If you have a $250 deductible, you will pay $250 before the insurance takes over (for covered costs only). But if you have a $2,500 deductible, you're responsible to pay a significantly higher portion out-of-pocket.

Do the Costs of EV Insurance Outweigh the Benefits?

There's no easy or one-size-fits-all answer to this question. Between the initial price and the insurance premium, an EV will likely come with some higher expenses (compared to a gas-powered car).

But you could potentially save money on the cost of fuel. EV owners may also qualify for tax credits. According to the Internal Revenue Service (IRS), buyers who purchase qualifying plug-in EVs in or after 2023 could get a federal tax credit up to $7,500. Some states also offer similar additional tax credits for qualifying EV purchases. 

Are you ready to find a new insurance policy for your EV? Contact the Illinois Insurance Center for more information.

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