Owners of costly electric cars save money on insurance

By Nathan Bomey, USA TODAY and Detroit Free Press

Early adopters of electric vehicles have to dig deep into their wallets to buy the cars, but some are reaping unexpected savings on their insurance bills.

Insurance costs vary widely based on driving history, local crime and vehicle theft rates, but experts say owners of EVs such as the Chevrolet Volt and Nissan Leaf generally can expect a lower insurance premium.

"When you look at electric vehicle owners, you probably have a pretty careful bunch there," said Jack Nerad, market analyst at Kelley Blue Book. "They're probably pretty mature, and they're not the young twentysomething male who gets into the most fights and has the most car accidents."

Although electric vehicles will be tiny slice of the market for years, insurers are starting to compete for EV policies.

Hartford Insurance announced last month that it will offer a 5% discount to EV owners nationwide by the end of the year. It says it's doing it because to support environmental sustainability, but experts say it wouldn't do it unless it thought it was a smart financial bet.

"You can count on that," said David Cole, chairman emeritus of the Center for Automotive Research. "Right now, it's almost too early in the game to make that judgment, but they believe it, otherwise they wouldn't be making that pitch."

Rick Lipinskas, of Albany, N.Y., who bought a Volt in March 2011, says he's paying New York Central Mutual about $1,000 per year for "more-than-minimum coverage" plus collision and uninsured driver.

"From talking with other Volt owners, we seem to be less hurried while driving," Lipinskas said in an e-mail. "I tend to set the cruise control at the speed limit instead of 5 mph above as I did in my ... 2007 Honda CR-V."

The average premium for a 2012 Volt owner who drives 15,000 miles annually is about $1,452 a year for the first five years, according to research site Edmunds.com's True Cost to Own estimates. That compares with about $2,024 for a cheaper gas-engine 2012 Cadillac CTS, for example.

The extended-range Volt, which can go up to 35 miles on electric alone before a gasoline motor kicks in, starts at $39,995 with shipping; the CTS starts at $36,810.

The average premium for a 2012 Leaf owner is about $1,513 per year, while it's $1,801 for a gas-engine 2012 Nissan Maxima, says Edmunds. The all-electric Leaf starts at $36,050; the Maxima starts at $33,200.

But some owners, depending on what they trade in, might not get a break. And some insurers may even charge more:

Phoenix-area resident Paul Cummings said his insurance premiums with State Farm went up $204 a year after he switched from a $44,000 Ford F-150 to a Volt.

Brittany Senary, a spokeswoman for insurer Progressive, said in an e-mail that drivers who switch to a more costly electric car face higher insurance premiums. "Because newer vehicles with more expensive technology and parts generally cost more to fix ... they're generally more expensive to insure. We don't currently offer EV discounts because we cannot justify them based on our claims data."

Nerad says some insurers may be unsure how to price their policies because of the expensive battery packs in EVs, though the batteries are rarely damaged in crashes because they're in protective cages.

Doug Neal, executive director of the University of Michigan engineering school's Center for Entrepreneurship, got a first-hand look at EV insurance issues when he crashed his Chevy Volt a few months ago. A car turned in front of his Volt, causing minor damage to the front bumper.

"The only complexity was I couldn't just take it to any repair shop," he says. "I had it taken to one that knew how to work on an electric car. But they have a network of those."