Electric vehicles (EVs), often promoted as a cheaper long-term alternative to petrol cars, come with higher insurance costs, according to new data. While drivers may save on fuel, insurance premiums for EVs are significantly above those for conventional vehicles, highlighting another layer of ownership expense.
Research by Choice reveals that Australian EV owners pay an average of $2,545 annually for insurance, compared with $1,702 for petrol vehicles—a difference of roughly 40%, or $843 per year. The disparity persists across vehicle ages: new EVs cost nearly 30% more to insure than petrol equivalents, while vehicles aged one to four years carry premiums 22% to 27% higher.
Hybrid vehicles fall between these extremes, with new models costing about $2,005 annually, compared with $1,865 for petrol cars. This positions hybrids as moderately more expensive than conventional vehicles, but still cheaper than fully electric models.
Several factors contribute to the higher costs for EV insurance. Repair networks for electric cars are still developing, requiring parts to be sourced from overseas and labor to rely on a smaller pool of qualified technicians. These factors elevate repair costs, which are reflected in insurance premiums.
Over time, premiums may decrease as the EV market matures. Electric vehicles have fewer moving parts than traditional cars, potentially lowering the likelihood of mechanical issues. Expanded repair infrastructure and increased technician availability could also drive insurance costs down.
Most insurers currently cover EVs and hybrids under standard car insurance policies, though some provide additional coverage for charging equipment. As the electric vehicle market grows, insurance providers are likely to adapt, potentially narrowing the cost gap between EVs and petrol cars.
