Do Cars With Self-Driving Features Cost Less to Insure?

For vehicles, there are six levels of driving automation, ranging from 0 (no automation) to 5 (full vehicle autonomy).

Right now, there is no fully automated vehicle available to the public. Most advanced systems operate at level 2, including Tesla’s Full Self-Driving system, GM’s Super Cruise, Hyundai’s Highway Driving Assist 2, and Ford’s BlueCruise. These cars can control steering and acceleration, but the driver still needs to monitor the driving.

Adaptive cruise control — which became widely standard between 2017 and 2020 — operates at level one of automation.

According to the Highway Loss Data Institute, Advanced Driver Assistance Systems (ADAS) features reduce the frequency of claims¹. For example, rear automatic emergency braking systems have lowered property damage claim rates by almost 30 percent.

However, when an accident does occur, the cost of the claim is much higher. Here’s why cars with automated features have higher car insurance rates:

1. Sensor vulnerability: Sensors and cameras are often located in bumpers, fenders, and side mirrors—which are usually damaged in minor fender benders. What used to be a $500 plastic bumper repair can now be a $3,000 repair involving camera replacement and calibration.
2. Calibration costs: Even after replacing a part, technicians need to calibrate sensors to communicate correctly with the car’s computer. This requires expensive software and hours of high-rate labor.
3. Windshield complexity: Many ADAS cameras look through the windshield, which can triple the cost of repairs. If a rock cracks your glass, you’ll need glass from the original equipment manufacturer and a camera recalibration.

Insurance rates are based on the cost of claims, so the expense of repairing high-tech vehicles outweigh the amount saved by avoiding minor accidents.

If you’re planning to purchase or lease an EV, it’s important to know that the car brand will determine your car insurance rate. There are key differences between major manufacturers, like the autonomous features offered and the repair experience. Here’s how Tesla, GM, Hyundai, and Ford  compare.

Tesla

While Tesla’s Full Self-Driving system has more high-tech features compared to competitors, its vehicles are expensive to insure. Tesla owners can expect high repair prices, since Tesla limits the availability of parts and restricts who can make repairs.

The company launched Tesla Insurance to make policies more affordable, using telematics data to help calculate rates. However, there are a couple things to keep in mind:

• States like California effectively bar insurers from using telematics to calculate premiums, so savings may not be as high
• City driving, which involves frequent stops and starts and proximity to other cars, will often lower a telematics score, which can cut into savings

Consider these factors when deciding whether to purchase a usage-based insurance policy.

Owning an electric vehicle means facing specific circumstances that drive the cost of car insurance rates. Here are three factors that make an EV more expensive to insure:

High-Voltage Battery Replacement

The battery is the most expensive part in an electric vehicle, costing between $10,000 and $20,000. If the battery casing is damaged in a crash, providers usually require a total replacement because of fire risk. As a result, a moderate accident with an EV can result in a total loss, leading providers to charge higher premiums to cover their risk.

Specialized Labor Shortages

While more drivers adopt electric vehicles, the number of qualified mechanics trails behind. Independent repair shops face high costs and risks to repair EVs, including training technicians and facing electrocution risks.³

Labor time (except painting) for EVs is double the average for non-EVs, and paint labor time is 50 percent higher⁴. The higher labor time and costs translate to higher premiums.

Higher Market Value

EVs have a higher purchase price than gas-powered cars, which drive up car insurance rates. If you own a $55,000 Mustang Mach-E, it will cost more to insure than a $30,000 Ford Escape because the payout in a total loss incident is higher.

While EV insurance rates are high, there are several factors that may lower the cost of insuring electric vehicles with autonomous features. Over time, these rates may dip below premiums for gas-fueled vehicles.

Standardization of Technology

As blind-spot monitoring, automatic braking, and lane-keeping assist become standard features, the cost of the sensors will decrease. Repair shops will also become more proficient at calibrating them, reducing labor times.

Shift in Liability Laws

Eventually, as we move toward fully autonomous vehicles, liability may shift from the driver to the manufacturer. If the car is driving itself, the manufacturer (or the software provider) assumes the risk. This could transform the auto insurance industry, transferring the costs from vehicle owners to the automaker through product liability policies.

Data-Driven Pricing

Telematics will have a bigger role in determining rates, and providers will rely on fewer factors like credit score. Autonomous vehicles that prove they are driving safely could receive substantial discounts, rewarding owners for investing in safety tech.

Here’s how to find the best EV insurance and pay less for your policy:

• Compare providers: Look into tech-forward carriers like Lemonade or Root, which can use telematics to offer fairer pricing.
• Bundle policies: This remains one of the most effective ways to save. Bundling your EV auto policy with home or renters insurance can save you up to 25 percent.
• Utilize green discounts: Some car insurance companies have specific discounts for hybrid and electric vehicles. Ask if providers offer a green vehicle discount.
• Shop before buying: Before signing the papers for a new Rivian or Ford Lightning, get the VIN and run insurance quotes. It’s better to be prepared so you don’t spend more than expected on insurance.

While the safety benefits of autonomous features are undeniable, it’s not yet reflected in car insurance costs. Owning a high-tech vehicle means paying higher premiums to enjoy cutting-edge performance and safety.

However, the long-term looks more promising. As specialized parts become standard and autonomous technology verifies its safety record over billions of miles, we expect premiums to decrease. Until then, being proactive can help you find affordable premiums for your EV.