Insuring An Electric Car In Canada

Insuring An Electric Car In Canada

Written by Lisa Rennie
Fact-checked by Caitlin Wood
Last Updated August 18, 2021

No matter what type of car you drive, you must purchase an auto insurance policy. It’s the law here in Canada. 

But what about electric cars? How much does it cost to insure these types of vehicles? Does having an electric car affect your insurance costs?

Let’s go into a little more detail about electric cars and the insurance policies needed to insure them.

What Is An Electric Car? 

An electric car has an electric motor that uses energy stored up in rechargeable batteries. It doesn’t use an internal combustion engine to run like a traditional vehicle does. Not only are electric cars quieter than traditional gasoline-run vehicles, but they also emit no exhaust emissions. 

Most electric cars can be charged into a standard electrical wall outlet without needing a separate charging station. However, you can upgrade to a full charging station so the battery charges faster. 

Electric cars can either be fully electric or hybrid. An all-electric car runs exclusively off the battery, while hybrid cars can run on an internal gas combustion engine when the battery runs out. 

Types Of Insurance Required For An Electric Car

As mentioned, your electric or hybrid car will need to be covered under an auto insurance policy. The following are the types of policies required:

  • Third-party liability insurance: This type of insurance will cover you against any claims made against you for damage done to another car or other property, bodily harm, and death. 
  • Accident benefits insurance: If you’re involved in a car accident and you, a passenger in your car, or a pedestrian involved require medical attention, this type of car insurance will offer financial compensation, no matter who is at fault. It can cover medical treatment, lost income, or other services required while you’re recovering. 
  • Uninsured auto insurance: If you are involved in an accident with an uninsured driver, this type of insurance will protect you financially and cover the cost of damages done. 
  • Direct compensation property damage (DCPD): This insurance policy will offer financial compensation for your damaged car and any contents within it when you are not at fault for the incident. In certain provinces, like Ontario, Quebec, New Brunswick, Nova Scotia, and PEI, DCPD is mandatory.

Cost Of Electric Car Insurance

The cost of an auto insurance policy will range depending on a number of factors, much like a policy for a gas-run car. These factors include the following.

Driver-Related Factors

  • Age: Younger drivers tend to be a little more dangerous behind the wheel, and they’re also much less experienced than older drivers. Insurance policies are therefore more expensive for young drivers.  
  • Location: Insurance rates are more expensive in some areas than others. Where you live affects your likelihood of being involved in an accident, as well as how much the incident could cost. 
  • Driving record: A clean driving record means you’re less of a risk, which insurance providers will reward with lower rates.
  • The type of license you carry: A full license will mean slightly cheaper premiums compared to a new driver who still has to go through all the levels of graduated licensing. 
  • How you use your car: Whether you use your car for work or for leisure will matter when it comes to how much you’ll pay in insurance premiums. 

Vehicle-Related Factors

  • The value of the vehicle: Electric vehicles tend to be more expensive than conventional cars, on average. More specifically, it may cost you approximately 20% more to buy an electric car.
  • The cost to repair or replace the vehicle: Costs for electric cars can be different compared to gas-run vehicles.
  • How the vehicle is parked or stored: If you park your vehicle on a private driveway or garage versus on a public street, you may be able to save a little on car insurance. 
  • Type of battery: When it comes to electric cars, there are other factors at play in terms of how much your car insurance policy will cost. More specifically, an EV car battery is more prone to being damaged in a collision, which can drive up repair costs. 
  • Annual mileage: The farther your drive, the higher the chances of being involved in an accident. As such, more mileage usually means higher premiums. 

Find out how you can save money on your car insurance

How To Save On Insurance For Your Electric Car

There’s no getting around a car insurance policy, but that doesn’t mean there aren’t ways to keep costs to a minimum. Here are some ways to help you reduce your premiums and keep more money in your pocket:

  • Add insurance-friendly car features. The safer your car is from theft, the lower the odds of it being stolen, which also minimizes the risk for the insurance company. Installing an anti-theft device and other safety features can help keep your car safer and therefore reduce insurance costs.
  • Get a used car. Used electric cars are not only less expensive to buy, but they may also be more affordable to insure. 
  • Increase your deductible. In the event that a claim must be filed, you’ll first need to pay a deductible upfront before your policy kicks in. In general, a higher deductible means lower premiums, and vice versa. So if you’re looking to reduce your monthly premiums, consider increasing your deductible. 
  • Get several quotes. Be sure to shop around for an insurance policy like you would with any other product or service. An online aggregator can help make comparing quotes from different insurance companies quick and simple. 

Electric Car Insurance Discounts

Electric cars may be a bit more expensive to buy than gas-fueled cars — for now — but they don’t have to be more expensive to insure. In fact, it may be more affordable to get a car insurance policy for an electric car, depending on the situation. 

An increasing number of insurance providers are offering incentives to drivers to buy electric cars, including reduced premiums and discounts. Plus, there are the usual discounts available to those who qualify, such as discounts for bundling insurance products, clean driving records, and for those who have gone through a government-approved driving course. 

If you decide to buy an electric car, be sure to shop around and keep an eye out for credit, discounts, and incentives. 

Tax Rebates For Electric Cars

Not only do insurance companies offer incentives to drivers of electric cars, but so does the Canadian government. Eligible drivers may be able to get a tax credit of as much as $7,500 for an electric or hybrid car in an effort to encourage more people to drive zero-emission vehicles. There’s also a $2,500 rebate for shorter-range plug-in hybrids. 

Provincial governments also have their own incentives, such as Ontario’s rebate of between $5,000 to $8,500. 

Insurance For Electric Cars FAQs

Do I have to insure my electric car?

Yes, all cars must be insured in Canada, regardless of whether it’s an electric car or a gas-fuelled one. 

Are electric cars cheaper to insure?

That depends on a few things, such as the make, model, and condition of the car. 

What is the cheapest electric car to insure? 

The Nissan Leaf and the Kia Soul EV are a couple of the cheapest electric vehicles to insure. 

Will insuring a hybrid car affect my discount?

Whether or not you buy a fully electric car versus a hybrid won’t impact your discount. Insurance companies apply discounts to all cars that are considered low-emission, including hybrids. 

Final Thoughts

Insurance for an electric or hybrid car is required to operate a vehicle legally in Canada. Whether or not it’s more expensive to insure than a gas-run car depends on several factors, though more and more insurance companies are offering incentives to drivers who purchase these low-emission vehicles. Be sure to shop around to find the best rate.

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Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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