Tricky aspects of insuring electric vehicles

author: FutureCar Staff    

Electric vehicles (EVs) are becoming increasingly common on Indian roads, with their sales accounting for 6% of all sales, up from 1% in 2019. The growth has been rapid, with 13 lakh units sold in 2023 so far, compared to around 2 lakh unit sales in 2019. As the festive season approaches, we can expect to see even more electric vehicles on the road.

The insurance options for EVs are still in their early stages, with incremental changes being made to policies to address the unique aspects of these vehicles. Companies like HDFC Ergo, Bajaj Allianz, Royal Sundaram, and Magma HDI insurance offer EV-specific policies and add-ons to insure the battery and charging set-up.

Compared to internal combustion engine (ICE) vehicles, the cost of insuring an EV is typically higher. The bulk of the cost of an EV is in the battery and electric motor, and the external charging set-up is also crucial to insure. EV insurance also considers factors such as improper charging stations, voltage fluctuations, and other mishaps that can cause significant damage to the vehicle. Roadside assistance is especially important for EVs, as they can easily find themselves out of charging-point range.

In addition to the higher cost, insuring an EV also requires comprehensive or own damage insurance, in addition to the mandatory third-party insurance. Comprehensive insurance covers damage to the policyholder's vehicle due to theft, fire, or natural calamities, as well as providing additional services like legal cover for third-party damage and personal accident covers. Roadside assistance and cashless claim processing may also be enhanced in comprehensive cover. These features are particularly important for EVs due to the risks associated with the battery pack, manual charging, and electric motor.

Some policies also include roadside assistance for breakdowns, energy issues, or accidents. As EVs have a limited range and rely on charging infrastructure, the chances of getting stuck are higher, making insurer assistance a valuable tool. EV insurance can provide breakdown services in select cities with comprehensive coverage.

In addition to regular add-ons, separate add-ons for battery covers and motor cover address the critical component risks of EVs. The battery cover includes the charger and the battery, while the motor cover protects against water ingress and any component damage. However, insurance does not cover surges and voltage fluctuations if non-OEM supplied materials are used for charging or other purposes. Manufacturer faults, recalls, and damages during the warranty period are also not covered.

While the current motor insurance products are more suited to ICE engines, there is a need for EV insurance tailored to the specific differences and risks of these vehicles. Such insurance can benefit EV owners in terms of battery and performance.

FutureCar Staff