Why is insurance for electric vehicles like Tesla so expensive? How does it differ from regular car insurance?
In recent years, the government has introduced numerous measures to encourage people to replace or purchase electric vehicles in response to environmental protection initiatives. However, many car owners are deterred not only by the high price of electric vehicles and the insufficient number of charging stations throughout Hong Kong, but also by the exorbitant premiums for electric vehicle insurance. Why is electric vehicle insurance, such as Tesla's, so expensive? How does it differ from regular car insurance? AWM has compiled information on electric vehicle insurance to help you understand more before making a purchase decision!
Electric vehicle insurance
Electric vehicle insurance is a type of car insurance designed specifically for electric vehicle owners, and is essentially no different from private car insurance. Like private car insurance, electric vehicle insurance is divided into three-tier and full coverage, with the same scope of coverage. However, electric vehicle owners can purchase additional coverage for their personal charging devices
According to section 4 of the Motor Insurance (Third Party Risk) Ordinance (Chapter 272), drivers must purchase valid third party risk insurance (third party insurance) for motor vehicles used on the road, otherwise it is illegal; vehicle owners can also choose comprehensive motor vehicle insurance (full coverage) for more comprehensive protection
The three-year insurance only covers losses or damages caused to the car owner by third-party liability, and does not cover damage to the car itself; comprehensive insurance covers damage to the car and legal liability to third parties
| Three guarantees | Full coverage | |
|---|---|---|
third party
|
✓ | ✓ |
| Damage to insured vehicle | ✗ | ✓ |
| Medical expenses | ✗ | ✓ |
| First-year trade-in guarantee for all new cars | ✗ | ✓ |
| 7-day temporary replacement vehicle guarantee | ✗ | ✓ |
| No-claim discount protection | ✗ | ✓ |
| Lost car keys | ✗ | ✓ |
| Repair parts with "zero" depreciation within the time limit | ✗ | ✓ |
| Flood | ✗ | ✓ |
| fire | ✗ | ✓ |
| Traffic accidents | ✗ | ✓ |
| Theft | ✗ | ✓ |
It's worth noting the "Charger Liability Coverage" section in electric vehicle insurance. Many electric vehicle owners use personal chargers to quickly charge their vehicles because the original charger may take a long time to fully charge. Before purchasing electric vehicle insurance, you should check whether the "Charger Liability Coverage" only covers the original charger or also includes personal chargers. If the insurance only covers the original charger, owners can purchase additional coverage for personal charging devices
Tesla Insurance
"Tesla Insurance" is an insurance policy specifically designed for all models of electric vehicles produced by Tesla. Taking Liberty Mutual Insurance's "My Tesla Insurance" as an example, the premium is determined by first considering the annual mileage, and then adjusting the basic premium based on the electric vehicle specifications (model, vehicle type, year of production, etc.) and the driver's detailed information (no-claim discount coverage, driver's personal information, driving experience, etc.)
Currently, there are only a limited number of companies offering "Tesla Insurance," primarily Liberty Mutual Insurance and Dah Sing Insurance. Liberty Mutual Insurance's "My Tesla Insurance" is acomprehensive insuranceplan, while Dah Sing Insurance's "Tesla Electric Insurance" isa three-insuranceplan.
| Liberty Mutual Insurance's "My Tesla Insurance" | Dah Sing Insurance's "Tesla Electric Vehicle Insurance" |
|---|---|
third party
|
third party
|
| Trade-in guarantee (only for the first registered owner of a brand new Tesla) | Loss or damage to a vehicle caused by arson or theft (up to 400,000 yuan in compensation) |
| Windshield and glass repair | Charger Liability Coverage: This covers third-party liability arising from Tesla-designated public or private charging facilities |
| Loss of personal property due to burglary | |
| No-claim discount protection | |
| Vehicle service guarantee | |
| Car key replacement | |
Charger Liability Protection
|
Owners who purchase the "My Tesla Insurance" plan through Liberty Mutual Insurance will receive a more favorable premium in the first year, and new Tesla owners will be set as low-mileage users*
*Generally, Hong Kong car owners who hold a 60% no-claim discount, drive 15,000 to 20,000 kilometers annually, and have not made any claims in the past year or more are eligible for the no-claim discount. If there are no claims in the first year, your no-claim discount will start at 20% and increase by 10% annually up to a maximum of 60%
As for Dah Sing Insurance, there are also offers. Successful applicants for Dah Sing Bank's electric vehicle loan program can enjoy comprehensive car insurance* underwritten by Dah Sing Insurance for Tesla Model Y and Model 3 owners, with a first-year premium discount of up to HK$2,000
*The full insurance discount for electric vehicles is only applicable to customers who have successfully obtained approval for a loan from Dah Sin Bank for a Tesla Model Y and/or Model 3 electric vehicle
Electric vehicle insurance premium reference
The following reference premium* is based on the vehicle owner being 30 years old, having had their vehicle registered for more than 2 years, and purchasing an electric vehicle manufactured in 2022, calculated at 60% NCD; however, the actual premium is subject to the latest quote from the insurance company and agent
| Vehicle Model/Model | Three guarantees | Full coverage |
|---|---|---|
| Tesla Model 3 | From HK$3,500 | From HK$10,800 |
| Tesla Model S | From HK$3,500 | From HK$12,800 |
| Tesla Model X | From HK$3,500 | From HK$10,800 |
| Tesla Model Y | From HK$3,500 | From HK$10,800 |
| Audi e-tron | From HK$1,500 | From HK$6,500 |
| Porsche Taycan | From HK$1,610 | From HK$13,000 |
| BMW iX | From HK$1,500 | From HK$4,900 |
| Mercedes-Benz EQA | From HK$1,300 | From HK$5,200 |
| Nissan Leaf | From HK$1,300 | From HK$4,100 |
| KIA Niro EV | From HK$1,500 | From HK$4,500 |
Electric vehicle insurance VS regular car insurance
Although the coverage is roughly the same, electric vehicle insurance is more expensive than regular car insurance
Because electric vehicles have strong motor torque and accelerate faster, drivers accustomed to driving ordinary cars may not be able to adapt to the speed of electric vehicles. In the event of a sudden accident, they may not be able to brake in time or step on the accelerator by mistake, which may lead to traffic accidents on the road or collisions in parking lots
In addition, after an accident involving an electric vehicle, due to the more sophisticated technology and materials involved, it can usually only be sent back to the original manufacturer for repairs, and the cost of replacing parts and labor is often more expensive than that of a regular car
Therefore, electric vehicles are more prone to accidents than regular gasoline vehicles, and the compensation amounts are generally higher. As a result, some insurance companies are unwilling to underwrite electric vehicles. Electric vehicle owners should ask the insurance company whether they are willing to underwrite their vehicles before signing an insurance contract
Regarding prepayment, electric vehicle insurance is more expensive than regular car insurance. For example, Tesla insurance prepayment can easily reach tens of thousands of dollars, meaning the owner has to bear the first tens of thousands of dollars of the compensation amount. Tesla insurance also has a high mileage prepayment; if the average daily mileage of a Tesla electric vehicle exceeds 130 kilometers (calculated annually), an additional prepayment will be required
How to reduce electric vehicle insurance premiums?
Although electric vehicle insurance premiums are higher, paying attention to the following points can help reduce these premiums, making you a savvy consumer
Purchase third-party liability insurance
Although the coverage of the three types of insurance is less, the premium is also lower. Electric vehicle owners can decide whether to purchase full insurance based on their own needs
Reduce driving distance
For example, with Tesla insurance, if you reduce your mileage, you won't trigger the "high mileage deductible," and when you need to make a claim, you won't have to pay the additional deductible
Compare prices from three different vendors
Different insurance companies offer different discounts for electric vehicle insurance. Car owners can compare prices from different companies and inquire about their offers before making a decision
No-claims record
Car owners who purchase insurance should ideally have a high no-claims discount (NCD), be between 25 and 60 years old, and have no traffic accident claims in the past 3 years
FAQ
If an electric vehicle driver is involved in an accident, will the insurance company immediately terminate the coverage?
If an electric vehicle driver is involved in an accident, the insurance company may immediately terminate the coverage or significantly increase the insurance surcharge for the following year
What mileage data do I need to provide when requesting a quote from an insurance company?
If you are a brand new Tesla electric vehicle owner and this is your first insurance policy for the vehicle, you do not need to provide mileage data. If you are purchasing a used Tesla electric vehicle or renewing an existing policy, you will need to provide the insurance company with the current mileage and the date of first registration
There have been several suspected spontaneous combustion incidents involving Tesla electric vehicles in the past. If a Tesla electric vehicle spontaneously combusts, will理the company provide compensation ?
Whether an insurance company will compensate for a fire depends on the coverage of the car owner's insurance policy and the cause of the fire