In 2022, India became the fourth largest country in the world by assessment of the automotive industry and it contributes to about 6.4% of India’s GDP. But the major challenge for the industry is rising pollution and high fuel rate, fuel prices in India are very high (over Rs 100 per liter) in many parts of the states.
to protect your pocket from high fuel prices & High ICE Vehicle Maintenance costs, the only solution is electric vehicles. Yes! EVs are cost-effective, emit zero carbon emissions, and require no high-paying maintenance.
If you already have an electric vehicle, then congratulations you are in a win-win system. As you have insured yourself by buying an EV and not paying more money for fuel and maintenance, it is also necessary to check whether you have taken insurance for your electric Vehicles or not. let us understand why insurance is necessary for electric cars.
Why insurance is important for electric vehicles in India
Having insurance for your electric vehicle will be protected your EV against accidental damage, natural calamities, man-made calamities, in-transit damages, etc. Additionally, the owner-driver of the insured vehicle is offered a personal accident cover that protects him/her from accidental injury or death.
Why is electric car insurance so expensive?
Insurance is used for financial protection against physical damage resulting from traffic collisions and liability arising from incidents in the vehicle. Electric car insurance is expensive compared to normal ICE cars. it is Due to the battery technology used in EVs, the cost of replacement of the battery is high due to which the insurance premium is higher as compared to normal ICE cars.
Reasons for Higher Insurance Premium for Electric Cars?
There are several reasons for higher insurance premiums for electric cars.
- Electric cars are very light weighted which causes more damage when crashed.
- Electrics car runs on a battery which is costly and has an expiry date so the owner replaces the battery before they stop working properly.
- Due to high technology, it requires high maintenance and high skilled labor.
The premium rates have been fixed at a discount of 15% as compared to other cars.
Pros and Cons of an EV insurance
Benefits of Having an Insurance for your Electric Cars
- In case of an unfortunate situation where you have caused an injury to a third-party or damaged third-party property, then your insurance policy will cover such liabilities.
- A major part of the repair bill is covered by the insurance company in case of fire accidents, natural calamities, riots, and losses due to theft. This means you do not have to pay an expensive repair bill in case of damages.
- In case of any uncertainties such as accidental death, bodily injuries, or partial/total disabilities due to an accident, you will get complete financial compensation against it.
Disadvantages of Having an Insurance for your Electric Vehicle
- The price of electric cars as compared to normal ICE cars is higher because of the high technologies used, due to the high value of electric cars, their Insured Declared Value (IDV) increases, resulting in increased car insurance premiums.
- The various components used in the car are costly. The most expensive of them is the electric car’s battery, which accounts for more than 60% of its value. The battery of the car has an expiry date and replacing or repairing these parts can be a costly affair, so the owner replaces the battery before they stop working properly, resulting in increased car insurance premiums.
- All mechanics cannot service or repair electric cars, it requires specific knowledge and skills. Currently, the number of mechanics skilled in repairing electric cars is lower in India than the traditional car mechanics. All these factors result in high labor costs for the replacement or repair of electric car parts, and this is another reason why electric car insurance plans are expensive.
Electric Car Insurance Cost in India?
The premium rates for third-party liability insurance are decided by the Insurance Regulatory and Development Authority of India (IRDAI) as a new initiative to boost the adoption of electric vehicles in India. IRDAI has fixed third-party liability insurance premium rates at a 15% discount as compared to petrol/diesel vehicles. Source
Third-party insurance rates are based on battery capacity as mentioned in the table below.
Top 24 Electric Car Insurance Companies in India
|Electric Car Insurance Company||Motor OD Claim Settlement Ratio FY20|
|1.||IFFCO Tokio General Insurance||95.30%|
|2.||Royal Sundaram General Insurance||92.66%|
|3.||The Oriental Insurance Company||91.76%|
|4.||HDFC ERGO General Insurance||91.23%|
|5.||Universal Sompo General Insurance||90.78%|
|6.||Tata AIG General Insurance||90.49%|
|7.||The New India Assurance||89.60%|
|8.||SBI General Insurance||89.51%|
|9.||Bajaj Allianz General Insurance||88.83%|
|10.||Future Generali India Insurance||88.69%|
|11.||Bharti AXA General Insurance||87.99%|
|12.||ICICI Lombard General Insurance||87.71%|
|13.||Liberty General Insurance||98%|
|14.||Cholamandalam MS General Insurance||85.89%|
|15.||National Insurance Company||85.71%|
|16.||Edelweiss General Insurance||84.52%|
|17.||Reliance General Insurance||84.26%|
|18.||Acko General Insurance||83.91%|
|19.||United India Insurance Company||82.93%|
|20.||Kotak Mahindra General Insurance||82.81%|
|21.||Go Digit General Insurance||80.47%|
|22||Magma HDI General Insurance||79.60%|
|23.||Shriram General Insurance||77.26%|
|24.||Navi General Insurance||76.20%|
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.