Insurance for Electric Vehicles: A complete guide to ideal coverage and premium savings | Mint

Electric vehicles (EVs) are on the rise in India. But the insurance on such vehicles is expensive compared to those that run on petrol and diesel. Further, most insurance policies do not cover batteries. The cover on batteries can be bought only as an ‘add-on’ in most policies. Here is a primer on insurance for EVs, the ideal coverage you should have and other important aspects to keep in mind while purchasing your policy.

Why is insurance on EVs expensive?

The insurance on EVs is expensive compared to petrol and diesel vehicles as the IDV (Insured Declared Value) is higher. EVs are typically priced higher than vehicles that run on petrol and diesel. The insurance on EVs is decided after taking into account several aspects including the model of the vehicle, the manufacturer, the capacity of the battery pack and the geographical zone in which the vehicle is registered.

Is the battery covered under insurance for EVs?

Standard insurance policies for EVs usually do not cover batteries. Most comprehensive insurance policies do not cover losses arising from the depreciation as well as wear and tear of the vehicle. This is because batteries have a limited lifespan and will have to be ultimately replaced.

But most insurance companies do sell battery coverage as an ‘add-on’ feature or as a ‘rider’. These features can help in extending the coverage of the insurance policy at extra cost. You can buy them to ensure a decent enough coverage for your vehicle.

What are the factors that you should consider before buying coverage for batteries?

A battery is the most important component in an EV. So, you should have an uninterrupted coverage for it as out-of-pocket costs for replacing the battery are quite high. Here are some of the factors that you should keep in mind while buying coverage for your EV batteries.

• Age of the vehicle: This is the first thing that you should consider before taking the ‘add-on’ cover. If the EV is below five years old, then you should opt for the ‘add-on’ cover. Most insurers offer this cover only for a specific number of years. But you should avail it as long as it is offered by insurance companies.
• Sum insured: The cost of replacing the battery is typically around 40%-50% of the total cost of the vehicle. So, you should keep this in mind while deciding the sum insured for the ‘add-on’ cover. You should take the maximum possible sum insured for the battery as inflation would drive up its costs significantly higher in the future.
• Geographical location: If you live in a flood prone area, then you should definitely go for a higher sum insured for the battery. Since the chances of water ingression into your battery is quite high in flood prone areas, the premium rates for such areas will also be significantly more. But you should buy an adequate battery cover in such cases even if the premium costs are higher.
• Co-payments and deductibles: Most ‘add-on’ covers come with co-payment and deductible clauses. If the cover has such clauses, it means that you have to bear a certain percentage of the cost of the claim at the time of settlement. Do read the fine print carefully on co-payment and deductibles. You should ideally choose an insurance cover that does not contain any co-payment and comes with standard deductibles.

What are the other features that you should look for in EV insurance?

Since EVs are new to the market, their operation, maintenance, equipment and components differ from the vehicles that run on petrol and diesel. Vehicle owners should take a ‘motor protector’ cover for their EVs. This cover, which is not available in standard EV insurance policies, also comes as an ‘add-on’. The additional cover is quite useful when it comes to saving you from hefty expenses for repairing the motor that powers your EV.

You should have insurance cover for charging equipment, sensors and camera. You should ideally take the zero-depreciation cover as an ‘add-on’ since it is not available in standard EV insurance policies. With this, depreciation on components will not be deducted from your claim amount. You should also take the ‘Roadside assistance cover’ as it is handy when your vehicle encounters a breakdown while you are travelling.

How about motor third party insurance and other standard options?

Third party insurance and other regular features that are available for petrol and diesel vehicles are also there in EV insurance. While the premium rates for standard coverage for petrol/diesel vehicles is based on CC (Cubic Capacity), it is based on Kw (Kilowatt) for EVs.

EV insurance policies provide financial protection for your vehicles against liabilities such as damage, fire, natural calamities, riots, theft of the insured vehicle and third-party injuries or damage to their property. By choosing the right cover, you can avoid unnecessary expenses.

Allirajan M is a journalist with over two decades of experience. He has worked with several leading media organisations in the country and has been writing on mutual funds for nearly 16 years.