Are EVs cheaper to insure than gas vehicles? It depends.

Electrics vehicles (EVs) are still generally more expensive to insure than gas-powered models in mass-market segments, but it depends on the vehicle type, finds a new study from MyChoice Financial.

In the compact vehicle (sedan) segment, EVs are consistently more expensive to insure, the study finds. In the compact SUV segment, the picture is mixed; in the luxury SUV segment, gas vehicles carry a higher insurance burden.

“What this shows is that EV insurance isn’t ‘always higher’ or ‘always lower,’” MyChoice CEO Aren Mirzaian tells Canadian Underwriter. “It’s model-specific, and in some cases the difference exceeds $1,300 per year between comparable vehicles.

“That makes insurance one of the most important hidden costs of EV ownership.”

MyChoice’s study examines more than 60,000 Ontario auto insurance quotes collected last year through MyChoice.ca, its insurance comparison platform. The study compares popular vehicles against gas-powered models in the same segment.

“We decided to specifically focus on Ontario for this as it makes sense to isolate these studies because of differences in market dynamics,” Vitalii Starov, MyChoice’s VP of product growth, tells CU, pointing to factors such as repair costs, theft rates, write-off thresholds, etc. “It wouldn’t be an apples-to-apples comparison…

“We are present in Ontario, Alberta, Quebec and the Maritimes, so [we] might eventually do a similar-type study in those provinces.”

For consistency, MyChoice used a standard driver profile: A 35-year-old married driver (male or female), fully licensed, and with a clean driving record. The driver owns the car outright and is looking for both comprehensive and collision coverage to ensure maximum insurance protection.

This standard driving profile ensures MyChoice gets the most unbiased result, Starov says. “The study isn’t trying to answer who pays more, but which cars cost more to insure. A standardized driver removes noise and lets the car itself drive pricing differences.”

The study finds EVs more expensive to insure that their gas-powered counterparts in the compact/entry sedan segment. The Tesla Model 3 EV costs $1,776 a year to insure, $223 more than a Honda Civic ($1,553) and about $90 more than a Toyota Corolla or Mazda3. The Nissan LEAF is even higher at $1,893 per year, making it $340 more than the Civic.

The compact SUV segment shows a more mixed picture. The study finds the Tesla Model Y ($1,746 a year) is about $322 more expensive to insure than the Subaru Forester ($1,424 per year) and $209 more than a Volkswagen Tiguan ($1,537 per year). But the Tesla Model Y is $97 cheaper than a gas-powered Toyota RAV4 ($1,843 per year).

Flip the script

In the luxury SUV segment, in one comparison, “the gas-powered luxury SUVs are dramatically more expensive to insure than the EV,” the study says. The gas-powered BMW X5 costs $3,626 a year to insure, $1,363 more than the Tesla Model X ($2,263 a year). The gas Mercedes GLE ($3,313 per year) is $1,050 more than the Tesla Model X.

“At this level of the market, insurance pricing is driven far more by vehicle price, theft risk, and repair costs than by fuel type alone,” MyChoice says.

Also within the luxury SUV segment, there is a rare case where the gas-powered vehicle is nearly comparable to insure against the EV: the gas-powered Audi Q7 costs $3,189 a year to insure, just $75 more than the Audi Q8 e-tron EV at $3,114 a year.

“It shows that insurance pricing isn’t driven purely by powertrain type,” the study says. “Vehicle value, repair complexity, and claim severity often matter more than whether a car is electric or gas-powered.”

So the theory that EVs are more expensive to insure than their gas-powered counterparts is not universal, MyChoice concludes.

“The reality is much more nuanced,” Starov says. “Insurance costs depend far more on the specific vehicle model, its repair costs, theft risk and replacement value than on whether it’s electric or gas.

“That’s why comparing quotes across different vehicles and insurers before buying is one of the smartest steps a consumer can take,” he says. “In many cases, the difference between two EVs can be larger than the difference between an EV and a gas car.”

For Starov, the most interesting aspect of the study is that the EV insurance conversation has matured. “It went from, ‘are EVs expensive to insure?’ to, ‘which EVs make financial sense once insurance is included?’”