EV boom brings higher insurance costs for drivers

A Kia EV9 on a bidirectional charger on Jeju Island / Courtesy of Kia

When the owner of a Volkswagen ID.5 checked his insurance renewal quote, he had to do a double take. Despite another year of accident-free driving, his annual premium jumped from 430,000 won ($286) to 700,000 won.

“Has anyone else's insurance gone up this much?” wrote the driver, who is in his late 40s, in an online forum for electric vehicle (EV) owners.

Another forum user, who is waiting on a delivery of a newly ordered EV, said the insurance quote alone gave him second thoughts.

“I was told it would cost 300,000 to 400,000 won more than my gasoline car,” he wrote. “I guess I’ll have to make up for it through savings on charging and vehicle taxes.”

For many EV owners in Korea, those experiences are becoming increasingly familiar.

As EVs gain market share in the country — helped by lower running costs, government subsidies and a growing range of models — many drivers say unexpectedly high insurance premiums are eroding much of the financial advantage of switching from gasoline-powered cars.

According to the Ministry of Land, Infrastructure and Transport, 220,177 new EVs were registered last year, up 50.1 percent from a year earlier, bringing Korea’s cumulative EV fleet to nearly 900,000 vehicles.

But as more drivers switch to electric cars, insurers are grappling with a costly reality. EVs are significantly more expensive to repair than their gasoline-powered counterparts.

Data from the Korea Insurance Development Institute show that the average insurance claim for an EV accident reached 3.41 million won in 2025, compared with 1.96 million won for gasoline-powered vehicles. Claims involving EV fires or explosions averaged 16.68 million won, more than twice the level for conventional cars.

The gap reflects more than just the cost of replacing damaged parts.

Even relatively minor collisions can become expensive repairs. While a conventional vehicle might need little more than a new bumper, an EV often requires technicians to inspect its high-voltage battery for hidden damage and recalibrate cameras, radar and other sensors that support advanced driver-assistance systems. Those additional procedures, combined with the potential cost of replacing a damaged battery, can significantly increase repair bills — and comprehensive insurance premiums.

New vehicle designs are adding to the challenge.

Many of the latest EVs use aluminum body structures and gigacasting, a manufacturing technique that forms large sections of the vehicle as a single piece. Instead of replacing an individual panel, repair shops may need to repair or replace much larger structural components, driving up repair costs.

For consumers, that means a clean driving record does not necessarily guarantee lower premiums.

Auto insurance premiums are determined not only by an individual driver’s claims history but also by the accident frequency and average repair costs associated with a particular vehicle model. As claims become more expensive across an entire model line, premiums can rise even for drivers with spotless records.

That has fueled calls for a more sophisticated approach to pricing EV insurance.

Tesla has emerged as one of the best-known examples. Since 2019, the U.S. automaker has offered its own insurance product that incorporates safety scores based on driving behavior into premium calculations. Drivers with higher scores can receive premiums up to 20 to 30 percent lower than those charged by traditional insurers.

Replicating that model in Korea, however, would not be straightforward. Under current regulations, automakers must obtain an insurance license to sell insurance products directly. Using vehicle-generated driving data to set premiums would also require overcoming a range of regulatory hurdles, including rules governing personal data and approval of insurance pricing.