Take out insurance for your electric vehicle? 6 things to consider – The Financial Express | CarTailz

By Adarsh ​​Agarwal

Electric Vehicles (EVs) have started to gain traction in India with ever-increasing fuel prices and growing environmental concerns over the high CO2 emissions of Internal Combustion Engine (ICE) vehicles. Low maintenance costs and pro-government policies have also contributed to the increasing acceptance of electric vehicles.

Central and state governments are also taking encouraging steps towards building a cleaner and greener transport system to support the goal of making India a leading electric vehicle market by 2030. For example, the government’s new EV policy on battery swapping with interoperability standards was announced The Union budget 2022 will contribute to faster adoption of electric vehicles in the country.

The Government also grants individuals a one-off tax exemption of up to Rs 1.5 lakh on interest paid on a loan taken out to purchase an electric vehicle under Section 80EEB. Also, in March 2020, India’s Insurance Regulatory and Development Agency (IRDAI) called on insurers to incentivize EV users by offering a 15 percent discount on motor liability insurance premiums.

According to government data, a total of 3.11 lakh electric vehicles were sold in 2021; this rose to 4.19 lakh in 2022. The wider adoption of electric vehicles in the country has led to higher demand for electric vehicle insurance. Just like internal combustion engine vehicles, electric vehicles also need insurance to be allowed to drive on Indian roads. The type of coverage offered – first party damage and third party liability – for electric vehicles is the same as for ICE vehicles.

Also Read: 5 Important Car Insurance Points to Consider When Buying Your First Car or Bike

EV insurance typically covers liabilities such as accidental damage, fire, natural disasters, riots, theft of the insured vehicle, and injury to third parties or damage to their property. New-age insurers offer all types of auto insurance products such as standalone liability, standalone, comprehensive, or long-term new vehicle bundles.

Here are some pointers to help you make an informed decision when purchasing insurance for your electric vehicle.

  • Comprehensive coverage: Electric vehicles are more expensive than fuel-based vehicles. It is therefore recommended to opt for a policy that fully covers the vehicle and not a liability insurance that only covers damage caused to a person, vehicle or property of third parties. Also look for supplemental coverages offered by insurers for broader protection. The premium for various additional services may differ from insurer to insurer.
  • bonus: Compared to petrol and diesel variants, comprehensive insurance premiums for electric vehicles are relatively higher due to the higher repair costs and the cost of battery replacement. This is due to the advanced technologies used in electric vehicles, which leads to increased costs. However, customers can get a 15 percent discount on liability premiums, which means that you can insure electric cars on favorable terms. However, keep in mind that the price of the car and the location of the policy also affect the premium.
  • Zero Depreciation Add-on: EV components are manufactured with high-end technology and cost more. The zero depreciation supplemental coverage becomes beneficial in the event of a claim, as the amount calculated based on the depreciation is waived and the entire claim amount is paid. For example, batteries depreciate much faster than the traditional value of a vehicle.
  • Location and impact on premium: The type of vehicle and region directly affect the underwriting of the policy. For example, if vehicles or vehicle components such as batteries are stolen at certain locations, the premium may be higher. Due to insurance restrictions, the insurance offered may have a higher premium than in other parts of the country.
  • Insured declared value: Different insurance companies offer different insured values ​​(IDV). Before considering the IDV offer from the insurer of your choice, it is important that you assess its current market value. When comparing electric vehicle insurance online, make sure you are looking for an insurer that offers an IDV that is closest to market value. This is useful in the event of theft or total loss of the vehicle.
  • Pay as you Drive (PAYD) additional function: Electric cars are generally driven within city limits and are therefore driven less compared to fueled cars. PAYD offers customers the benefit of a lower premium for vehicles driven less in a year. Make sure you look for insurers that offer this coverage as they offer premiums at discounted rates.

Also Read: Choosing the Right Car Insurance: Should You Choose PAYD or Usage-Based Car Insurance?

When taking out insurance, look out for other insurer benefits such as cashless repairs, smartphone-enabled self-monitoring and the ability to customize IDV. Customer support, the availability of additional options and the Claim Settlement Ratio (CSR), i.e. the total claims settled by the insurer, are also important as these contribute to a smooth customer experience. In India, the EV field is still developing and as the charging infrastructure improves, more people will choose electric vehicles in the future.

(The author is Chief Distribution Officer, Digit Insurance. The views expressed are personal.)

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