Why EV insurance costs more than a petrol car and how Australians can get a better deal

EV insurance can be double the cost of a fuel or diesel car of similar worth — and it’s not connected to battery fires. We reveal why and how to find a better deal. SEE THE VIDEO.

Exclusive: Insurance for electric vehicles can be twice the price compared to conventional cars of similar value — but it’s not due to battery fires.

The real reason EV cover costs more is extra labour expenses for repairs as workshops go slow amid fear of electrocution, industry insiders have revealed.

Electric vehicles made up 13.1 per cent of new car sales in the three months to the end of June, surging from 9.6 per cent a year earlier.

EVs are expected to account for an even greater slice of the market in the coming year, as choice expands rapidly.

Value has been improving as well, although that hasn’t been the case with insurance.

Recent analysis by Compare the Market found cover for an EV can be nearly twice the cost of a diesel or petrol vehicle of similar value. On average they were 43 per cent more expensive to insure.

Insuring a Tesla can be expensive. Picture: Tesla

According to popular wisdom, this is due to underwriters bearing the cost of battery fires. However, those in the know say otherwise.

While batteries are the most expensive car component in history – costing from nearly $20,000 to more than $100,000 – they flame out so rarely that it is not a big factor in claims costs and therefore premiums.

There have been just ten battery fires in Australia and only 712 worldwide out of 58 million EVs delivered, said Australia’s largest insurance company IAG’s head of automotive research Shawn Ticehurst.

Despite this, a recent survey by IAG found two-thirds of Australians were concerned about EVs catching fire, or their safety when charging.

“People don’t need to be alarmed about EVs catching fire,” Mr Ticehurst said. “There is next to zero fire risk if they are properly charged.”

Zurich, which is the preferred local insurer for Teslas, agreed.

Zurich’s general insurance head Alex Morgan said “battery fires are not a risk driver of significance when you are looking at EVs.”

The market is expanding into utes such as the BYD Shark. Picture: Supplied

It is fear – not fire – that has been chiefly responsible for making EV insurance expensive.

IAG’s Mr Ticehurst said at least 25 per cent more time is being spent to repair EVs as workshops proceed warily.

“There’s a repair network that’s still dealing with how they repair an EV and how do they do it safely,” Mr Ticehurst said. “The battery needs to be disarmed before you can work on the car so there isn’t live electricity flowing through the car that could kill someone.”

To address this, IAG has partnered with Bosch to create a one-day course that teaches how to disarm and rearm an EV battery.

Repairers at more than half of its workshops have now done the course.

Among EV owners, finding affordable insurance is a hot topic on social media.

Noosa businesswoman Ruby Sillato turned to the 103,000-member Tesla Owners Australia Facebook group for advice.

Tesla Model Y owner Ruby Sillato with her car at home in Sunshine Beach. Picture Lachie Millard

After shopping around, she went with RACQ for her 2023 Model Y Performance.

“I think it’s quite fair,” Ms Sillato, who runs a holiday accommodation business, said. “I feel they are more reliable, even though they are not necessarily the cheapest.”

There are huge variations in EV premiums, according to Compare the Market, which looked at policies from 11 brands representing six different underwriters for a range of popular models.

For a Tesla Model 3, the least expensive quote was $1832.58 while the dearest was $4946.43 – about 170 per cent more. The spectrum for a BMW iX1 eDrive20 was ever greater – from $1592.51 to $4971.99, which is a difference of 212 per cent.

Tesla Model Y owner Ruby Sillato shopped around before buying her Tesla. Picture Lachie Millard

Insurance broker Cory Jellicoe urged owners against simply choosing the cheapest policy.

Mr Jellicoe, of Matos Insurance Specialists, said there were several ‘must-haves’.

“You want a policy that provides a hire car because these repairs can take a long time,” he said. “Plus you need a windscreen option for Teslas and choice of repairer.”

Zurich’s Mr Morgan agreed with IAG’s findings that some repairers were taking extra time and caution.

However, that wasn’t the case for Teslas covered by Zurich because they were repaired in specialist workshops.

Besides Teslas, Zurich does not directly offer insurance to consumers who own EVs.