Record high car insurance for electric vehicle owners

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【Summary】Car insurance costs have reached a record high, with electric car owners paying up to three times more than petrol or diesel vehicle owners. The average cost of car insurance has increased by 58% in the past year, with drivers now paying £924 on average. Factors contributing to the rising prices include the high cost of covering electric vehicles, inflation, increased vehicle repairs costs, and the ban on the "loyalty premium.

FutureCar Staff Oct 13, 2023 4:23 PM PT

Record high car insurance for electric vehicle owners

Car insurance costs have reached a new high, with electric vehicle drivers paying more than a third compared to petrol or diesel alternatives. According to Confused.com, insuring a Tesla Model Y costs £1,421 annually, while a Vauxhall Mokka petrol option costs only £449.

The past year has seen a significant increase in prices, attributed to the high cost of insuring electric vehicles and the impact of inflation. Car insurance costs have risen by 58% in just 12 months, amounting to an additional £338 per person. The average driver now pays £924, breaking previous records, according to Confused.com's analysis of six million quotes.

There are several reasons behind the rising cost of car insurance. Adjusting to post-pandemic life and recent industry changes have greatly influenced the amount drivers are paying. Inflation is also a major factor, with the cost of vehicle repairs increasing by 33% to £1.5 billion, reflecting rising costs and energy inflation.

The rise of electric vehicles has also played a role in the increased insurance costs. While EVs are growing in popularity, they come with a higher price tag and more sophisticated machinery, leading to more expensive repairs. As a result, the higher repair costs are being spread across all motorists, not just EV owners.

Another contributing factor is the ban on "loyalty premiums." Since January 2022, car and home insurance providers are no longer allowed to charge existing customers more to renew their policies. In response, insurers have increased the prices of their core products to maintain profitability.

The return to normal driving habits following the pandemic has also impacted insurance costs. With more drivers on the road, the frequency of claims has increased, leading to higher payouts by insurers. Louise Thomas, a motor expert at Confused.com, warns drivers to be aware of how pricing may affect them at their next renewal.

Inner London is the most expensive region for car insurance, with average prices now at £1,503, a 61% increase in 12 months. Outer London follows with average prices of £1,187, a 60% annual increase. Manchester and Merseyside have seen around a £417 (57%) increase, resulting in average prices of £1,154. In the West Midlands, car insurance costs average £1,139, following a £442 (63%) increase.

To save on car insurance, there are several strategies you can employ. Paying for insurance annually instead of monthly can result in cheaper rates, as insurance companies often charge interest for spreading the cost over the year. Increasing your voluntary excess can also lead to lower premiums, but make sure you can afford to pay it if you need to make a claim. Providing accurate mileage information is important, as higher mileage generally leads to higher premiums. Enhancing your car's security by installing approved alarms or immobilisers and parking in secure areas can also help reduce insurance costs. Finally, using a price comparison site can help you find the best deal for your needs and potentially save money.