During his 2011 State of the Union address, President Obama set a goal of having 1 million electric vehicles on American roadways by 2015. While that would be a small percentage of all vehicles in the United States, it would represent a huge increase in the number of electric vehicles already in American garages and driveways.
So, if you're eyeing an electric vehicle (EV) like the Chevy Volt or the Nissan Leaf, how much will the auto insurance cost? At this point, it's a guessing game.
“I think it’s too soon to say how owning and driving an EV will affect the cost of a motorist’s auto insurance premium,” says Claire Wilkinson, a spokeswoman for the Insurance Information Institute.
State Farm spokesman Dick Luedke notes there isn’t enough data about claims involving electric vehicles like the Volt and Leaf to supplement other information that determines a driver’s premium, such as driving record, age and marital status. Therefore, electric vehicles currently earn a "neutral" rating from State Farm.
State Farm's "system makes use of our claims data to determine whether a make and model of vehicle generates more than the average amount of claims costs or less than the average amount of claims costs," Luedke says. "Until we have enough claims data for a new make and model of vehicle, we assume it generates an average amount of claims costs and we rate it accordingly."
Jack Nerad, executive editorial director and executive market analyst at Kelley Blue Book, says two conflicting factors are at work with insuring electric vehicles.
On one hand, he says, electric vehicles are pricier than the average car -- roughly $33,000 to $40,000 -- and parts such as electronic battery packs are expensive to replace. On the other hand, Nerad says, drivers of electric and hybrid vehicles tend to be "pretty safe and sane individuals," so they typically pay less for auto insurance.
Electric vehicles are "a new frontier for insurance companies," Nerad says.
Some insurers do offer discounts for electric cars and other "alternative fuel" vehicles, such as hybrids. The discount at Farmers Insurance, for instance, ranges from 3 percent to 5 percent.
At Allstate, however, owners of electric vehicles and hybrids are out of luck in the discount department. Company spokeswoman Stephanie Sheppard says such discounts aren't offered, in part, "because the cost of these vehicles tends to be higher, and therefore the cost to repair or replace them would be higher as well."
If hybrids are any indication, electric cars will be costlier to insure than regular gas guzzlers. For instance, the Highway Loss Data Institute has found that hybrids are involved in collisions more often than other vehicles, meaning auto insurers are likely to stick them in a category of cars that cost more to cover.
“Time will tell how EVs stack up from the insurance underwriting perspective,” Wilkinson says.
Time also will tell whether Obama's goal of 1 million electric vehicles by 2015 is feasible.
Rebecca Lindland, director of automotive research at IHS Global Insight, doubts the president's goal will be reached. After all, General Motors Corp. sold just 281 Volts in February 2011, down from 321 in January 2011. Nissan Leaf sales totaled 67 in February 2011, down from 87 from the previous month.
Still, Lindland doesn't put Obama's goal entirely out of range.
“It is actually doable,” Lindland says. “I say that because Americans have purchased just about a million hybrids from December 2007 to December 2010. The question is, will Americans do it and will the products be available?"
For his part, Paul Scott, co-founder of Plug In America, believes the president's goal can and will be met, as long as production of electric cars is adequate. Aside from his involvement with Plug In America, a nonprofit coalition of electric car drivers, Scott sells the Nissan Leaf at a dealership in Santa Monica, Calif.
“A million is a reach but can be reached,” Scott says. “The demand is clearly there. The only thing that’s going to stop it is if they can’t get the production up.”
A November 2010 survey by the Consumer Reports National Research Center found that among the 39 percent of car shoppers looking at a hybrid or electric vehicle, 16 percent were considering a plug-in hybrid like the Leaf, which runs on electricity and gas, and 14 percent were considering an electric-only car like the Volt.
For electric vehicles, "there are a lot of infrastructure commitments that need to be made for widespread acceptance,” Lindland says.