The rise of electric vehicles (EVs) in Korea is bringing a new challenge for drivers: soaring insurance costs. As more people switch to EVs, insurers are facing a costly reality due to the high repair costs associated with these vehicles. 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. This gap reflects more than just the cost of replacing damaged parts. Even relatively minor collisions can become expensive repairs, as technicians need to inspect high-voltage batteries and recalibrate advanced driver-assistance systems. New vehicle designs, such as aluminum body structures and gigacasting, are adding to the challenge, driving up repair costs. This means that a clean driving record does not necessarily guarantee lower premiums. Auto insurance premiums are determined by an individual driver’s claims history, 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. This has fueled calls for a more sophisticated approach to pricing EV insurance. Tesla has emerged as one of the best-known examples, offering 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. However, replicating this model in Korea 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. This issue highlights the need for a more nuanced approach to EV insurance pricing, one that takes into account the unique challenges and costs associated with these vehicles. As the market for EVs continues to grow, insurers and policymakers must work together to find solutions that balance the financial benefits of EVs with the rising costs of insurance.
