OAI: Increased Insurance Premiums a Drawback of Electric Vehicles

RANCHO CUCAMONGA, Calif., Nov. 21, 2012 /PRNewswire/ -- A recent survey from J.D. Power and Associates shows the extra costs that come with owning an electric vehicle (EV) could be holding the technology back from becoming more widespread, but the study left out an additional financial aspect of EVs that could hurt their owners' pocketbooks: higher insurance premiums.

The research firm released its first-ever Electric Vehicle Ownership Experience Study this month, finding that consumers considering electric technology in their next car purchase "primarily want to lower their fuel costs."

The study focused on all-electric and plug-in hybrid vehicles—both of which utilize battery-based, electric vehicle (EV) technology—and found that buyers of both all-electric and plug-in hybrid vehicles would have to wait an average of 6.5 to 11 years to recover the higher price paid at the time of purchase.

"There still is a disconnect between the reality of the cost of an EV and the cost savings that consumers want to achieve," Neal Oddes, from J.D. Power and Associates, said in a statement.

Compared with owners of similar gas-only vehicles, EV owners paid $10,000 more on average for their cars, and plug-in hybrid owners paid an average of $16,000 more. 

To make matters worse, though, you might have to pile increased auto insurance premiums on top of that, according to Online Auto Insurance (OAI).

A quote comparison run by OAI last year showed that hybrid models tend to see higher rates than their gas-only cousins. OAI's analysis found that among a handful of California insurers, insurance premiums for a gas-only Highlander averaged 17 percent lower than the premiums for the hybrid model.

A 2010 report from Mitchell International found that hybrid repair costs are generally higher because of pricier car parts and the added expense of having to go to a mechanic that can repair vehicles with EV technology. The same will likely prove to be true for exclusively electric vehicles.

But that's not to say EV owners are dissatisfied, and neither are the automakers behind EV models, according to Oddes. The report found that more than 8 in 10 EV owners say they "definitely will" or "probably will" stay within their brand for another EV purchase, while only half of owners of all vehicle types say the same.

The increased coverage costs can be tempered by discounts for both hybrid and electric-only models. Companies like AAA, Travelers, Farmers and The Hartford have begun offering such discounts.

SOURCE Online Auto, LLC