Insurance for electric vehicles: Electric vehicles or EVs are gradually gaining popularity in the Indian market. Official data shows that electric vehicles (EVs) accounted for more than 6 per cent of vehicle sales in India in 2023, with electric two-wheelers (E2Ws) constituting over half of the market. Around 5 years back, it was around 1 per cent. That is a rapid growth — from around 2 lakh unit sales in 2019 to 13 lakh units sold in 2023 so far.
With the rise of electric vehicle (EV) sales, one aspect that is crucial for consumers is having proper insurance options for these vehicles. It is just as important as having access to spare parts, chargeable batteries, and charging spots. Insurance companies have recognised this need and have made adjustments to their existing policies accordingly.
Some notable examples include EV-specific policies offered by HDFC Ergo, Bajaj Allianz, and Royal Sundaram. Additionally, Magma HDI insurance provides battery-secure add-ons for private cars. Ensuring comprehensive coverage for EV owners has become a priority in the industry.
Recently, Zuno General Insurance has launched three new add-on insurance covers for EV owners. The first-of-its-kind covers have been floated for private charging stations, charging accessories, and protection of the cars during charging. Zuno General Insurance’s EV add-on covers have been designed to complement its standard private car policies and cater specifically to the unique needs of electric and hybrid vehicles, which are the newest trends in the car industry.
EVs vs fuel-powered cars
When it comes to insuring an EV, there are a few important factors to consider. The primary focus of EV vehicle insurance is on the battery, electric motor, and charging set-up. As a result, the cost of insuring an EV is typically higher compared to conventional fuel-powered ones. This is partly because electric cars tend to be more expensive than conventional fuel-powered ones, resulting in a higher Insured Declared Value (IDV). With a higher IDV comes higher car insurance premiums.
In addition to the basic coverage provided by insurance plans for conventional vehicles, EV insurance also includes replacement costs and maintenance expenses. These costs are generally higher for electric cars compared to their traditional counterparts.
Besides, operational aspects such as charging station compatibility and voltage fluctuations are taken into account during the insurance process. These factors can have a significant impact on the overall value of an EV in case of mishaps or accidents.
Like, Zuno General Insurance’s EV cover has Comprehensive coverage for privately-owned charging stations solely used for charging insured vehicles, safeguarding them against fire, theft, and accidental damage, which are common mishaps.
The company has extended the coverage to include charging cables, connectors, adapters, and all standard charging accessories for protection against accidental damage and theft.
HDFC ERGO offers three types of electric car policies. HDFC ERGO electric car insurance policy covers the following types of financial liabilities: Third-party liability, natural and man-made calamities, accidental damages, explosion and fire, theft, and personal accident cover.
ACKO Electric Car Insurance covers injuries to third parties or damage to their property, includes damages to your car in an accident, covers damages to the car in fire or explosion, addresses accidental death or injury of the owner-driver, provides coverage for natural disasters like earthquakes, floods, storms, etc, covers man-made disasters such as riots, vandalism, etc, protects against losses due to the theft of the vehicle.
Magma HDI’s Battery Secure add-on provides insurance solutions for concerns of EVs and hybrid electric vehicle (HEV) owners regarding battery failures in case of accidental damage. It offers comprehensive financial protection for risks such as unforeseen power surges during charging or damages caused by water ingress or short circuits that may impact the battery, electric motor, or HEV system.
“Just like any other car insurance policy, an electric car insurance policy also comes in two types – Third Party Insurance and Comprehensive Insurance. For those who drive less, there are options for Pay-As-You-Drive insurance plans as well. Coverages are akin to a regular motor insurance policy so the difference comes about in add-on covers that offer enhanced protection,” said Susheel Tejuja, Founder & Managing Director at PolicyBoss.
Premiums for third-party car insurance policies
The determination of premiums for third-party car insurance policies for electric vehicles (EVs) follows a similar process to that of traditional fuel cars. The Insurance Regulatory and Development Authority of India (IRDAI) sets these premiums. In the fiscal year 2022-23, IRDAI proposed a 15% discount on insurance premiums for electric cars and a 7.5% reduction for hybrid electric cars.
Looking ahead to FY24, the suggested base premium rates for private electric cars that do not exceed 30 KW is set at Rs 1,780. For electric cars falling within the range of 30 KW-65 KW, the recommended rates are Rs 2,904. As for owners of electric cars exceeding 65 KW, they would be required to pay Rs 6,712 in insurance premiums. These figures reflect the pursuit of fair and appropriate coverage in accordance with IRDAI regulations.
What to look at while buying insurance covers for EVs?
Tejuja mentioned that there are covers available for EVs which provide enhanced protection for the battery, including extended warranty, coverage for consequential losses, and damage caused by water. Additional covers are offered for protection against damage to self-owned charging stations and charging accessories. One important cover is for engine protection, which covers electrical system failures, wiring damage, and motor burnout costs that can be expensive to repair.
“Electric vehicles rely heavily on sensors and cameras so there is a need to offer protection against these sensitive parts of the vehicle. Many insurance companies are wary of underwriting as the potential risk and damage to the vehicle is higher given that electric cars are zippier than their ICE counterparts, meaning faster acceleration and with sensitive components and wiring like cameras, sensors etc., a frontal impact or a dent on a sensitive part of the electric vehicle has a higher chance of having severe impact. We expect this product category to offer more relevant add-on coverages in the future as there is maturity in practice and claims, for EVs in India,” he added.
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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.