electric car insurance

Electric Car Insurance: Are Electric Cars Cheaper to Insure?

There’s a fat chance that one of the vehicles you’d get to ride in Singapore would have an electric or hybrid engine: from the bus you would take at the airport to the taxi, they could be an electric car.

In fact, Singapore’s government itself encourages its citizens to take an electric car: Singapore Green Plan 2030 hopes to make a strong push for more electric vehicles (EVs), with the goal of going fully electric by 2040.

Why is it Becoming a Thing?

Singapore probably has the highest concentration of electric cars in Southeast Asia, largely due to the perks. The Land Transportation Authority has implemented downward revisions in road taxes for electric cars, which allows owners to save up to S$45,000 in upfront costs.

While the government would give EV users incentives, it may not be the same case for insurance companies as they cannot afford to give huge discounts.

Electric Car Insurance Cost

In some instances, insurance in Singapore for fuel-fed cars would cost just around S$800 per year.  However, an annual fee of S$2,000 for an electric vehicle car insurance is already  considered a good deal — as there are cases where insurance payments stretch to north of S$5,000.

While the price of the insurance policy is also largely dependent on what EV you own and other personal considerations, there are a lot of factors as to why insurance for electrical vehicles are often expensive.

Although EV car insurance plans do not differ much from the standard offerings, it must be remembered that the technology of an electric car is more complicated than its diesel or gas-powered counterparts — indicating that maintenance will be easier for the latter.  More maintenance for EVs means a higher risk than conventional cars – and higher risks always mean higher insurance rates.

Woman holding charger and charging electric car close up

Are Electric Cars Cheaper to Insure?  

As of now, no, because there are conditions that do not appear in regular vehicles.  If an EV’s battery breaks down and the insurer does not shoulder the repair, it could be very costly for the car owner.

Is a New Electric Car More Expensive to Insure? 

Yes. Singapore plans to go fully electric by 2040 — which is still around 17 years to go.  So if you currently do not have the money to cope with the sharp monthly and yearly costs of owning an electric vehicle — including high insurance rates, you can go petrol for your new car, as these would not be affected by the diesel ban in 2025.

Difference Between Insurance for Electrical and Conventional Cars

Another thing that pushes EV insurance prices is the total cost: for example, a fully electric Hyundai Ioniq costs S$172,888 through financing for its base model, according to SGCarmart.com.  Granted that electric car buyers will get tax incentives, this Ioniq still costs more than the base model of a Mazda CX-30, a more capable and more spacious crossover that runs on a gasoline engine.

Also, there is a high likelihood that the CX-30 would get a cheaper insurance than the Ioniq because as said earlier, higher costs usually mean higher insurance rates.

Higher Parts Cost, Higher Insurance

While there are no significant differences in terms of the possibility of accidents between a fuel-fed car and an electric vehicle, insurance companies expect more parts to be damaged when an electric vehicle gets into an accident.

Having higher risks does not make electric vehicles inefficient — they are good cars, it’s just that on top of a higher open market value, replacement car parts are usually too pricey, making it impossible for insurers to offer the similar insurance policies given to internal combustion vehicles.

Let’s say an Ioniq would yield the following expenses:

  • S$1,475 monthly financing payment according to SG Carmart
  • electric car insurance premium between S$3,000 annually
  • charging costs of around S$300 per month

Based on these numbers, you could be looking at a total of $24,300 per year — worth more than the Mazda CX-30’s OMV without insurance — a big factor of which is higher insurance premiums.

Fewer Insurance Options

Typically, you would pay more to insure an electric vehicle than a conventional one, but the scarcity of insurance companies offering policies for EVs can also explain why insurance premiums are high.

List of Electric Car Insurance Providers in Singapore

You may wonder how much it costs to get insurance for an electric car compared to a gas car. But before comparing, you may want to take a look at this comparison table and find the best electric car insurance plan that suits your preference

Electric car insurance providers Description Plans offered/ Perks 
NTUC Income Car Insurance (Through Covered)
  • NTUC Income offers electric car insurance through Covered., where the policy is underwritten by NTUC Income while maintenance is under Carro Care.
  • NTUC’s usage-based pricing also uses the following rate to compute the overall payment per year, depending on the model and make
    • Tesla: Starts at S$0.20/km
    • Renault: Starts at S$0.06/km
    • Nissan: Starts at S$0.09/km
    • MG: Starts at S$0.10/km
    • KIA:  Starts at  S$0.10/km
    • Hyundai: Starts at  S$0.10/km
  • Covered. offers three kinds of electric vehicle insurance — third party only insurance, third party fire and theft insurance, and comprehensive insurance, where the comprehensive insurance provides the most coverage as it includes coverage for accidental causes, towing services of up to S$500, and medical expenses, and personal accident benefits up to S$50,000.
  • Maintenance coverage is different as they offer Prime, Plus, and Pro.  Minor servicing is available for all three plans, although only Plus and Pro offer major servicing.  Meanwhile, only Pro offers possible replacement of key parts like transmission, drive parts, suspension, and hybrid components.
  • It also provides a usage-based pricing, which means people driving less can expect rebates — 48 percent for those driving below 9,000 kilometers in a year; 33 percent for less than 12,000 kilometers; and 18 percent for 15,000 kilometers.
Allianz Electric Motor Protect This insurance offering from Allianz is a version of their standard car insurance policy, but geared towards electric car owners.  Unlike other insurance offerings, it covers electric and other components, and malicious cyber acts — or when cars are ‘hacked’.
  • Allianz similarly offers the three kinds of insurance — third party only insurance, third party fire and theft insurance, and comprehensive. However, the cyber hacking coverage and other key items like a new for old replacement scheme, a courtesy car, a transport allowance, a warranty on repairs done at an authorized workshop, and electric components cover — are only available in a comprehensive plan.
  • All insurance offerings have a no claim discount protector, or a mechanism which protects a customer’s insurance premium if the claim made was not due to an accident where the customer was not at fault.  However, only the third party fire and theft and the comprehensive allow for repairs to be done at any workshop.
  • The comprehensive plan also covers the advance driving assistance systems, or when accidents are made when driving assistance systems are activated by the car owner.  There is also a private car charging facility, which is also insured by Allianz.
Liberty Car Insurance (Tesla Insurance)  Liberty Insurance offers packages exclusive to Tesla owners and Tesla model vehicles.
  • Offerings from Liberty Insurance are similar to other car insurances like Allianz, except that it is only for Tesla owners.
  • Here are some of the benefits for Tesla Cars that can be found on their insurance package:
    • 24/7 support during accidents
    • Protection for charger-based damage
    • covers accidents when LTA-approved Autopilot and Full Self-Driving Capability features are activated
    • medical expenses
    • NCD protector
    • personal accident benefits

 

How to Save on Insurance for an Electric Vehicle?

You can reduce the prices of car insurance on EVs, but you need to sacrifice some kilometers.  There is usage-based insurance, which is what NTUC Income offers: it is a discount on premiums if a customer meets a specific amount of mileage per year.

According to Covered., people driving less than 9,000 kilometers annually can get a whopping 48 percent discount, while 33 percent is given to those driving for less than 12,000 kilometers in the same period.

Car Auto Motor Insurance Reimbursement Vehicle Concept

Other More Important Things You Need to Know

1. How Electric Vehicles and Fuel-fed Cars Differ

The key difference between electric vehicles and conventional cars is in the power delivery: Internal combustion cars need fuel, which means they need to visit gas stations. The fuel is then mixed with the air before being fed to the engine and then ignited — by a spark plug in petrol vehicles or through compression in diesel engines.

The ignition then triggers a piston to move up and down for inline and V-shaped engines and sideways for boxer types — resulting in explosions sending the crankshaft into a spin — which is then transmitted to the wheels.  But in electric engines, the electric motor operates through electromagnetism by reversing the poles of the electric current simultaneously, creating a rotary movement.

2. Environmental Concerns for Both

The explosions inside an internal combustion engine push the car forward which creates a by-product — carbon monoxide — which is then released into the air. This is because fossil fuels have a high carbon content, and high concentrations of inhaled emissions are dangerous to human beings

Despite the presence of catalytic converters to catch harmful chemicals, environmental scientists have warned about the negative effects of tailpipe emissions to the air.  Electric vehicles do not have that — electric cars are silent because they do not create explosions, and they don’t emit any smoke from their motor because the movement is propelled by electromagnetism.

People say if you’re concerned about the environment, it is better to own an electric car. In retrospect, there are fuel engine advocates who claim that the pollution inputs of electric cars are higher because of the efforts put into the creation and the charging of these batteries.

3. Some Things are Not Covered by Car Insurance

Worldwide, internal combustion engines are still used heavily, thus creating a huge market for parts and skilled workers — often resulting in a surplus and lower-priced materials.

Again, the same cannot be said for electric vehicles, as the following EV parts are not covered by most insurers:

  • Motor and electric components
  • Battery pack or battery failure
  • Elongated windshields in some Tesla model

Final Word

It is a very noble mindset to even consider an electric vehicle despite the possible high expenses that come with it, but aspiring customers should think carefully before making such financial decisions. 

Key Takeaways

  • Singapore plans to go fully electric by 2040 — which is still around 17 years to go.  If you do not have the money right now to cope with the sharp monthly and yearly costs of owning an electric vehicle – including high insurance rates, you can go petrol for your new car, as these would not be affected by the diesel ban in 2025.
  • If you avail of a petrol car in 2022, its certificate of entitlement would expire by 2032.  Maybe by that time, your finances would be better equipped to own an electric car, or you can renew the COE and ditch it before 2040 comes. By then electric vehicle prices may be lower due to higher supply.
  • But if you are intent on getting an electric car, it would be best to study how it should be operated so that you can avoid high expenses due to maintenance and parts replacement.

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