Electric vehicles have the key advantage of lower running costs, which helps recoup the extra up-front price premium compared to an internal combustion engine vehicle over time – although this doesn’t apply to every model.
With around 20 moving parts in EVs – compared to more than 2000 in a combustion car – it means maintenance is often cheaper (less labour to check and replace) and there’s less likelihood of things going awry.
Despite this, battery-electric cars are also often more expensive to comprehensively insure than traditional petrol- and diesel-powered models. So, why is this the case and what is the premium cost difference?
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NOTE: Insurance premiums in this story are quoted on 6 December 2022 and serve as a guide. Premiums vary depending on your driving history, where you live and more. |
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Welcome to part one of three price-based EV buying guides, this one focused on the most affordable electric cars available in Australia today
2 days ago6
JUMP AHEAD
- Why are EVs more expensive to insure?
- How much does it cost to insure an EV?
- MG ZS EV
- BYD Atto 3
- Hyundai Kona Electric
- Tesla Model Y
- Volvo XC40 Recharge
Why are EVs more expensive to insure?
According to the Insurance Council of Australia, electric car insurance premiums are generally higher for a number of reasons, outlined below.
| Key EV insurance premium factors |
|---|
| More expensive purchase price tag |
| New EV technology and parts like for the motor and battery are more costly to produce and replace |
| Fledgeling local supply chain of EV parts, leading to higher costs of importing them (exacerbated by the semiconductor shortage) |
| Fewer trained EV technicians and service centres in Australia |
| Dealing with EV batteries require specialty equipment and proper disposal methods (eg: recycling) |
How much does it cost to insure an EV?
The comprehensive car insurance quotes in this guide are based on a 30-year-old female living in Sydney with the below attributes.
- Garaged home address
- Clean 10-year driving record
- Purchased the vehicle in full up-front (instead of financing) for private use only
- The vehicle is painted white and has no factory or aftermarket modifications
- Drives 15,000km per year (41km per day) as per the Australian average.
She quoted a new annual comprehensive car insurance policy with three providers – the state motoring club NRMA, popular insurer Budget Direct, and budget-oriented offering Bingle.
The quotes are based on a middle-ground $850 excess (except Bingle for which $895 is the closest available option), with the vehicle insured for market value with no extras optioned (such as windscreen and window cover, hire car cover and new for old replacement) and no promotional discounts included.
MG ZS EV
The pure-electric MG ZS EV Excite ($44,990 drive-away) is closely matched with its petrol-powered ZST Excite ($30,990 drive-away) sibling when it comes to comprehensively insuring this small SUV. By going electric, it is around 13 per cent more expensive to insure on average.
| 2022 MG ZS EV Excite | 2022 MG ZST Excite | |
|---|---|---|
| NRMA | $1779 | $1437 |
| Budget Direct | $1841 | $1738 |
| Bingle | $995 | $828 |
| Average Annual Premium | $1527 | $1324 |
BYD Atto 3
The BYD Atto 3 Standard Range ($44,381 before on-road costs) is quickly gaining traction as one of the most popular electric cars in Australia. However, the Toyota Corolla Cross in top-spec Atmos Hybrid 2WD trim ($46,050 before on-road costs) is typically about 17 per cent cheaper than the BYD electric crossover to insure.
| 2022 BYD Atto 3 Standard Range | 2022 Toyota Corolla Cross Atmos Hybrid 2WD | |
|---|---|---|
| NRMA | $1819 | $1607 |
| Budget Direct | $2421 | $1763 |
| Bingle | $1099 | $1065 |
| Average Annual Premium | $1764 | $1468 |
Hyundai Kona Electric
The Hyundai Kona Electric Elite with the smaller Standard Range battery ($60,500) is based on the petrol-sipping Kona Elite ($31,990) – both before on-road costs – and is around 25 per cent more expensive to cover the battery-electric model on average.
| 2022 Hyundai Kona Electric Elite Standard Range | 2022 Hyundai Kona Elite 2WD | |
|---|---|---|
| NRMA | $1654 | $1011 |
| Budget Direct | $1812 | $1606 |
| Bingle | $1186 | $876 |
| Average Annual Premium | $1551 | $1164 |
Tesla Model Y
The ubiquitous Tesla Model Y RWD ($72,300 before on-road costs) is comparable to the combustion-engined Mercedes-Benz GLB200 ($67,000 before on-road costs) with a similar up-front purchase price (the Benz is also offered as a pricier all-electric EQB version). However, the Tesla medium electric crossover is about 23 per cent dearer to comprehensively insure than the petrol German luxury SUV.
| 2022 Tesla Model Y RWD | 2023 Mercedes-Benz GLB200 | |
|---|---|---|
| NRMA | $2056 | $1517 |
| Budget Direct | $2677 | $2543 |
| Bingle | N/A* | $1401 |
| Average Annual Premium | $2367 | $1820 |
*Insurer does not cover Tesla vehicles
Volvo XC40 Recharge
The Volvo XC40 Recharge EV in base two-wheel drive Plus guise ($72,990) shares its bones with the petrol mild-hybrid XC40 in comparable Ultimate B4 Bright trim ($59,990) (both before on-road costs). While the insurance price premium isn’t as big as some EVs, the electric SUV is about 11 per cent more expensive to cover on average.
| 2023 Volvo XC40 Recharge Plus Pure Electric | 2023 Volvo XC40 Ultimate B4 Bright | |
|---|---|---|
| NRMA | $2198 | $1597 |
| Budget Direct | $2013 | $2070 |
| Bingle | $1548 | $1450 |
| Average Annual Premium | $1920 | $1706 |
Electric cars are simply more expensive to insure today – typically 18 per cent more for the models in this comparison.
However, as the EV market grows in Australia with more available models, lower price tags, more local supply of parts and increasing numbers of trained technicians, the insurance costs will likely come down.
It’s worth noting that the instant torque and rapid acceleration times factor into EV insurance premiums, as some states do not allow provisional licence holders to drive a vehicle with a power-to-weight ratio higher than 130 kilowatts per tonne. This applies to models like the Tesla Model Y and Volvo XC40 Recharge EV in this list.
Like all new technologies, EVs right now are more expensive. But growing knowledge, increased competition and mainstream adoption mean costs will come down, including car insurance.
For now, despite the higher annual premiums and up-front purchase prices, EVs still have the advantage when it comes to running and maintenance costs, especially when charging off free solar energy at home.
People who drive more will be quicker to offset and surpass the price premium for going tailpipe emissions-free.
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Keyword: Electric car insurance premiums compared