Issues of Insuring Electric Cars in India: What You Need to Know

One of the biggest breakthroughs in the Indian auto sector is the rise of electric vehicles (EVs). With challenges brought on by COVID-19, EV manufacturers in India managed to sell an impressive 5,32,485 units over the past two financial years. With the government's focus on electric mobility and growing gasoline prices, analysts expect EV sales will climb 26% between 2021 and 2023. When buying a new car, now is the time to examine why are electric vehicles more expensive to insure. Before buying an EV in India, you must know the insurance requirements and expenses.

Key Highlights

1. The Department of Energy estimates that electric car battery packs have dropped by 90% since 2008. Electric car insurance premiums may rise as the demand for them rises.

2. Electric car manufacturers need help in securing the raw materials required for manufacturing. These challenges contribute to the high pricing of electric cars and subsequently lead to higher insurance premiums. 

3. Some insurance companies offer specific add-on covers or riders that cater to EV components, including battery replacement coverage. These additional covers can provide more comprehensive protection for your electric car. 

A Mandatory Requirement for Electric Vehicles

Any vehicle operated on Indian highways must have motor insurance, including electric cars, under the 1988 Motor Vehicles Act. It's important to know that electric car insurance differs from regular car insurance. Electric vehicles have unique characteristics and components. Thus, their insurance coverage is modified. Electric car insurance is also more expensive than gasoline or diesel car insurance.

Do Electric Cars Have Higher Insurance? 

Electric car insurance is more expensive than traditional vehicle insurance. Electric car insurance costs are higher because of many reasons. The main cause is the higher MSRP (manufacturer-suggested retail price) and related repair expenses of electric vehicles. Electric vehicles often incorporate expensive technology features, which can increase repair expenses. 

Repairs cost more since not all auto mechanics are certified to operate on electric vehicles. Electric cars develop cheaper and more resource-efficient as advancements in technology occur. The Department of Energy estimates that electric car battery packs have dropped by 90% since 2008. Electric car insurance premiums may rise as the demand for them rises.

Does insurance cover electric car batteries in India?

Electric cars (EVs) are becoming more popular in India. Thus, it's crucial to understand EV component insurance, especially battery coverage. 

In India, the coverage for EV battery replacement may vary depending on the terms and conditions of your insurance policy. Comprehensive car insurance covers EV battery damage from accidents, theft, or fire. You must carefully check your policy documentation and comprehend your insurance provider's coverage specifics.

Some insurance companies offer specific add-on covers or riders that cater to EV components, including battery replacement coverage. These additional covers can provide more comprehensive protection for your electric car. To determine the availability and extent of coverage for EV battery replacement, it is advisable to consult directly with your insurance provider.

What are the Insurance Issues with Electric Cars?

Electric car insurance prices are greater than standard coverage. Let's examine the various insurance issues with Electric cars.

1. Expensive to Purchase

Purchasing an electric vehicle typically costs more than buying a standard car. In India, even the most economical electric vehicles can cost up to Rs. 10 lakhs. Due to the higher value of electric vehicles, the Insured Declared Value (IDV) also increases. As a result, electric car insurance costs are higher. The initial outlay will be justified because buying an electric automobile would save money on gasoline and maintenance costs over time.

2. Costly Components

The battery is one of the parts that makes electric cars more expensive overall. Electric car batteries alone are worth over 60% of their value. Repairing or replacing these items may be expensive, affecting rates. If automakers lower electric car component costs, insurance prices must fall.

3. Battery Replacement

Electric cars run on high-capacity batteries that need replacement after a certain period. These batteries are expensive, costing several lakhs of rupees. Comprehensive electric car insurance policies cover battery replacement costs, leading to higher premiums. However, if you choose to exclude battery replacement coverage, you risk bearing the expense yourself in the future.

4. High Maintenance Costs

Electric cars require specialized maintenance due to their complex and costly parts. Finding mechanics with expertise in electric vehicle repair is currently challenging in India. Additionally, these skilled mechanics often charge higher fees for servicing and replacing electric car parts. Consequently, insurance premiums for electric cars are higher to cover these potential maintenance costs.

5. Supply Chain and Infrastructure Challenges

Electric vehicles still need to be widely owned in India, resulting in various supply chain and infrastructure challenges. Electric car manufacturers need help in securing the raw materials required for manufacturing. These challenges contribute to the high pricing of electric cars and subsequently lead to higher insurance premiums. As the demand for EVs increases and EV manufacturers invest in improving infrastructure, electric vehicle insurance costs are expected to decline.

6. Scarcity of Qualified Technicians

While plenty of conventional car mechanics exist in different towns and cities, finding skilled technicians for electric vehicles can be challenging. The limited pool of qualified mechanics charges higher repairs and parts replacement fees. Insurance companies incorporate these costs into their premiums to cover potential repair expenses. Therefore, car insurance renewal premiums for electric vehicles are higher.

Final Words

As the demand for electric vehicles rises in India, insurance costs must be considered before buying one. Electric car insurance premiums are higher than standard plans, but it's crucial to understand why. Electric car insurance costs more due to expensive parts, battery replacements, high maintenance, supply chain issues, and a technician shortage. As technology and infrastructure improve, expenses may fall. Electric car insurance is required by law and protects you financially. So, go ahead and embrace the future of mobility with an electric vehicle, keeping in mind the unique insurance considerations it entails. Comprehensive vehicle coverage normally covers battery damage or loss, but check the policy for details.

FAQs

Why are electric vehicles more expensive to insure? 

Insuring EVs are more costly than conventional vehicles. Two main causes raise EV insurance prices: their higher initial price and repair expenses. Higher insurance rates are typically associated with more expensive vehicles. Since electric cars require specialist components and personnel, repairs might be more expensive. Insurance prices rise due to rising repair costs. India and other countries offer tax incentives and subsidies to electric car owners, helping to balance out higher insurance costs.

What is the cheapest electric car to insure? 

A cheap electric car to insure in India is the Chevrolet Bolt. The annual full coverage premium for a Chevy Bolt averages ₹1,48,500. This is comparable to the national average of ₹1,49,000 per year for full-coverage auto insurance. Toyota Prius basic coverage vehicle insurance is affordable. The minimum yearly coverage premium for Toyota Prius is around ₹44,500. EV's age and mileage affect insurance prices. Thus, compare prices or consult an insurance agent to find the finest and most affordable electric car coverage.

How much is electric car insurance? 

Average vehicle insurance costs in India are ₹1,49,000 for complete coverage and ₹46,000 for minimal coverage. Chevrolet Bolt full-coverage insurance is cheaper than average. However, full coverage prices for expensive electric cars like the Tesla Model X might exceed the national average. Electric car insurance costs change, so compare quotes or talk to an agent to obtain the best offer.

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