Electric Vehicles Dominate Rising Insurance Costs: Insights from Insurify
A recent analysis by Insurify reveals that electric vehicles (EVs) incur, on average, a 42% higher insurance cost than traditional gasoline-powered vehicles. This assessment, based on over 235 million quotes in Insurify's database, highlights the financial landscape of insuring EVs despite their more economical power costs.
According to insights from Cox Automotive, sales of used EVs experienced a 54% increase in March compared to the previous month. Insurify's data indicates that the average annual cost for full coverage insurance of an EV in 2026 stands at $3,159, spanning all model years. In contrast, gas-powered vehicles average at $2,218 annually, with Tesla holding a significant share of the EV market while its insurance costs remain among the highest.
Factors contributing to the elevated insurance rates for EVs include their higher repair costs due to advanced technology. However, as vehicles with modern assistive technology become more prevalent, the insurance cost disparity between newer EVs and conventional vehicles reduces to 18%. The median vehicle age noted in Insurify's records is 11.5 years, highlighting the persistence of older gasoline vehicles.
The report further indicates a 37.6% rise in EV insurance costs for 2026 models compared to the previous year, an increase that is 24% greater than that of gas-powered vehicles. Nonetheless, insurance rates for newer EVs have decreased by 11.1% over the last year, surpassing the 7.7% reduction observed for newer gas vehicles. Overall, auto insurance rates reduced by approximately 6% in 2025, as reported by Insurify.
The report also discusses market dynamics, noting a significant uptick in EV sales late in the summer of 2025, driven by an expiring federal tax credit on September 30. Post-expiration, however, year-over-year sales experienced a notable decline.
The J.D. Power U.S. Insurance Shopping Study highlights an increase in the number of auto insurance quotes sought by consumers, with nearly half of new auto policies now being purchased online. The share of customers actively seeking auto insurance in the market has slightly decreased from 57% to 53%, indicating a stabilization in consumer behavior even though overall shopping activity remains high.
Lemonade has launched a specific insurance product targeted at Tesla drivers in Indiana, offering a 50% reduction in insurance costs per mile when using Full Self-Driving (Supervised) technology. This product is positioned to reduce the cost of Tesla ownership substantially.
In addition to this offering, Lemonade provides car insurance across a variety of states, including Arizona, California, Colorado, Illinois, Indiana, Ohio, Oregon, Tennessee, Texas, and Washington. This service covers a broad range of popular vehicles, including Teslas, under both traditional policies and innovative insurance solutions tailored to autonomous driving technology.