The insurance coverage and cost for EVs differs from fueled vehicles — here’s why – EQ Mag
The demand for electric vehicles (EVs) is slowly gathering pace in India. Apart from being a green alternative to petrol and diesel vehicles, they are likely to be cost-effective too in the long term.
Now, as in any vehicle purchase, it’s imperative to take an insurance policy for your EV. However, it’s important to note that the insurance coverage of an electric vehicle is different from that of a non-electric one.
Why is it so?
Electric vehicles are more expensive than conventional cars. They may have a greater susceptibility to damage and their costs for repairs are also higher.
Hence, insurance companies offer different insurance structures for them.
What are the differences?
EV insurance usually covers liabilities like accidental damage, fire, natural disasters, riots, theft of the insured vehicle, and third-party injuries or property damage, said Venkatesh Naidu, CEO of Bajaj Capital Insurance Broking Ltd while talking to CNBC-TV18.com.
“New-age insurers provide all types of motor insurance products for new vehicles, such as standalone third-party cover, standalone own-damage cover, comprehensive cover, and bundled long-term cover,” he explained.
The insurance cost of an electric scooter is almost equal to that of an ICE two-wheeler counterpart, while the insurance for an electric four-wheeler is slightly higher priced than the conventional petrol/diesel/CNG vehicle.
“This is because electric vehicles run on batteries of great capability and the latest technology. The auto parts of these vehicles come at a costly price either for repair or replacement,” Ashwini Dubey, Head of Motor Insurance Renewals at Policybazaar.com told CNBC-TV18.com.
Comprehensive insurance policy premiums for EVs are relatively higher when compared to petrol and diesel variants due to higher repair costs and battery replacement costs.
“This is due to the advanced technologies used in EVs, which result in higher costs. Customers can, however, receive a 15 percent discount on third-party premiums, allowing them to obtain insurance for electric vehicles at competitive rates. However, keep in mind that the cost of the car and the location of the policy will both affect the premium,” said Naidu.
According to Dubey, since electric vehicles are relatively new in the market compared to ICE vehicles, the claim experience on these vehicles is lower for insurers to be able to price the product aggressively.
The aftermarket is also much less developed compared to ICE vehicles which mean lower availability of aftermarket services pushing up prices.
How can you minimize the insurance cost of electric vehicles?
Apart from IRDAI’s 15 percent discount on third-party premiums for the EVs, the cost can also be minimised by choosing the right policy and strategy.
“For instance, if you are using your electric car for short trips, a Pay as you drive motor insurance plan might be the best fit for you. Also, EV owners must compare quotes from different companies and ensure that they get coverage from companies which favour green drivers. These recommendations will help you opt/plan the best deal,” Dubey suggested.