Drivers have decided Teslas are worth the higher sticker price — but are they ready to get burned on insurance?If you feel like you're seeing that shiny metal "T" more on the road, you're not mistaken. Electric vehicles sales are soaring, and Tesla is leading the charge.
Looking at new vehicle financing, EVs doubled their market share in the fourth quarter of 2021 compared to the year before, says a report by Experian.
Elon Musk's car company has a commanding lead: Three Tesla models made up over 75% of the vehicles financed.
But even though many Americans have decided a Tesla is worth the high sticker price, they could be in for a shock when they try to find affordable insurance for these technological and ecological marvels.
Don’t missMitt Romney says a billionaire tax will trigger demand for these two physical assets — get in now before the super-rich swarm
There’s a ‘perfect storm’ brewing in the multifamily housing market — here are 3 of the easiest ways to take advantage
Even the wealthy are living on the financial edge — here are 4 ways to bolster your finances before you fall off
Why do Teslas cost more to insure?While you’re going to save hundreds a month on gas, any electric vehicle will generally cost you more to insure.
Why is that? Car insurance companies come up with rates based on a whole range of factors. So even if you have a spotless driving record, live in a low-crime area and take advantage of some driving discounts, your rate is still likely to go up compared to your gas-powered car.
That’s because electric vehicles cost more outright and are more expensive to repair. The insurance company may deem you low risk to file a claim, but if anything happens to your car, it’s going to mean costly repairs. So your premiums are set high to reflect that risk.
If your premium with a gas-powered car is $1,000 a year, you’ll probably pay $1,250 with an equivalent electric car, according to ValuePenguin. As a luxury car, Teslas are pricier still.
Motortrend has studied how much it would cost each year to insure the various Tesla models available. Among other factors, these averages assume the owner is a single 40-year-old man with a clean record and good credit score:
Tesla Model 3: $2,114-$2,351
Tesla Model S: $3,673-$4,143
Tesla Model Y: $2,118-$2,227
Tesla Model X: $3,355-$4,025
And other car companies, including Chevrolet and Ford, are making gains against Tesla in the EV market, so be aware of the potential for higher insurance costs across the brands.
Of course, your rates will vary from insurer to insurer — which is why you should always compare quotes from multiple insurers.
How do other costs stack up?Most electric cars generally cost more to buy than standard vehicles. And when they’re damaged, you may have a harder time finding a mechanic qualified to repair them — in addition to requiring more expensive and difficult-to-source parts.
Damaged batteries can add to your repair costs. If your battery’s leaking, your mechanic will have to take extra precautionary measures, which will be reflected in your bill.
There’s also the need for a charging station. You should expect to have to pay somewhere in the range of $200 to $1,000 to install your own charging station before you hit the road.
Nevertheless, you can expect your new car to incur lower maintenance expenses overall. Electric cars also don’t need frequent oil changes or replacement radiator hoses, fan belts or gaskets.
So even with slightly higher insurance, your car budget shouldn’t have to change drastically.
Where do I go from here?If you do purchase a Tesla or another EV and begin the process of switching over your insurance policy, don’t forget to ask your insurer if there are any promotions or discounts you can take advantage of to lower your costs.
You may be able to bundle your other policies, like home insurance or life insurance.
Insurance companies often give discounts to safe drivers with clean records. Don’t be afraid to ask in case you’ve missed something in your own research.
But your best option to find savings when you’re looking for car insurance is to shop around for rates. The Insurance Information Institute recommends you seek out at least three quotes before settling on an offer.
With that done, you’ll feel all the power of sitting in the driver’s seat even when you’re not behind the wheel.
What to read nextWarren Buffett likes these 2 investment opportunities outside of the stock market
Bill Gates just won legal approval to buy 2,100 acres of North Dakota farmland worth $13.5M — and people are ‘livid’
Get the latest personal finance news sent straight to your inbox with the MoneyWise newsletter
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.Click Here To Get Funded!