Rising Costs of EV Insurance Despite Growing Popularity
Despite the increasing number of drivers transitioning to electric vehicles (EVs), new data has shown that insurance quotes for these vehicles have risen by 10 per cent over the past year. This trend comes as more Australians are turning to electric cars in response to rising fuel prices and economic uncertainty.
The financial strain on drivers is evident, with many feeling the impact at the fuel pump due to ongoing conflicts in the Middle East. While some motorists are stockpiling fuel to prepare for an uncertain economy, others are opting for fully electric vehicles as a long-term solution.
According to recent data from CommBank, there has been a significant surge in EV car loans. In March alone, the volume of new EV loans increased by 161 per cent compared to the weekly average recorded in February before the conflict in Iran began. This trend is not limited to private drivers, as business loans for Tesla vehicles also saw a sharp increase. Specifically, business loans for Teslas rose by 268 per cent in March compared to the same period last year. The bank anticipates this demand to continue under current economic conditions.
While the cost barrier for electric vehicles is gradually being reduced, with brands like BYD offering fully electric cars for under $30,000 before on-road costs, the cost of insuring these vehicles has increased. According to Compare the Market’s latest EV insurance index, comprehensive insurance quotes for electric cars rose by an average of 10.2 per cent between 2025 and 2026. Hybrid models also saw an increase, with premiums rising by 6.6 per cent over the same period.
The bi-annual report, which analysed policies across 11 unspecified insurers, revealed that the average cost to comprehensively insure an EV in Australia was approximately $2300. For hybrid cars, the general insurance cost was around $1700.
One of the most notable increases was seen in the Tesla Model Y RWD, the best-selling electric car in Australia last year. The average quoted premium for this model increased by $164 (5 per cent) from $3039 in March 2025 to $3203 in March 2026. Similarly, the Tesla Model 3 sedan saw a 3 per cent increase in its average quoted premium, rising from $3257 to $3356 over the same period.
While insurance costs vary based on individual circumstances, a spokesperson from Tesla Australia stated in February 2026 that its brand-backed insurance product has led to lower premiums for its models. “InsureMyTesla (Zurich) has seen average premiums across Australia reduce to approximately $1644. As with all insurance products, there will be a differential between states; however, the average price for the Tesla Model 3 and Model Y has reduced during the 12 months,” they said.
The largest average quoted premium increase among the EVs analysed in the report was for the Xpeng G6 and the Toyota bZ4X, with insurance quotes increasing by 24 per cent each. According to Compare the Market’s Economic Director, Eric Koch, the rise in insurance premiums is primarily due to the increasing cost of labour and spare parts. “The rising cost of labour and parts continues to push premiums higher, and this particularly affects electric cars due to battery replacement costs and specialised training needed for repairs,” he said in a media statement.
Compare the Market’s data also showed that some popular hybrid models experienced an increase in their insurance premiums. The BYD Sealion 6 recorded the largest rise among hybrid models, with a 18 per cent increase ($339) from $1482 in March 2025 to $1821 in March 2026. The BYD Shark 6, a plug-in hybrid ute, saw an average quoted premium increase of $113 (5 per cent) year on year.
Meanwhile, the Toyota RAV4, the second best-selling car by volume in 2025, recorded an average increase of 9 per cent, up $166 year on year. Interestingly, some popular hybrid models from Toyota, such as the Corolla and Camry, saw average insurance quotes decrease by 5 and 2 per cent, respectively.
The median insurance quotes on hybrid variants of Hyundai’s two best-selling models, the Kona and Tucson, also rose by $81 and $134, respectively.
