India offers a discount of 15% on its premiums for third-party insurance cover on electric vehicles compared to UK and US, which provides a discount of 14% and 21%, respectively. The policy covers damage costs and injuries caused to other vehicles and owners. The Insurance Regulatory and Development Authority of India (IRDA) is in charge of mandating the discount since 2019. The own-damage cover for electric vehicles in India has always been expensive. However, some insurers give a cheaper premium on the own-damage cover on variations of electric vehicles.
So far, there is no fixed trend because the electric vehicle sector is still in a nascent stage. In a statement, Amitabh Jain, Head Motor & Health Underwriting & Claims at the ICICI Lombard, states that own-damage premium rates for electric vehicles are cheaper if there is an indication of low speed and lack of claims related to engine damage.
Insurance might be expensive, especially if electric vehicles’ cost is considerably higher than the cost of another fuel variant. The most expensive part of an electric vehicle to get insurance is the battery because it accounts for about 40-60% of the automotive cost. When the cost for battery drops, so are the insurance costs. However, insurers are keen on battery performance and durability, meaning one can incur much cost if the battery has underlying problems concerning durability and performance.
The insurance ratings are with the other fuel types, except that batteries are treated differently depending on the coverage, ratings, and likes. Fuel type is the mainly used rating criteria alongside other factors like claim experience and geography.
A pure electric car, which is not hybrid, comes without an engine, and that is why there would be no reason to replace engine oil or engine coverage damage. As a result, fewer costs will be used for other services and repairs. Nevertheless, the costs for replacing the batteries are considerably high. Electric vehicles have fewer parts; however, one part is affected, and how the vehicle functions are altered. A few garages offer such services, becoming a limitation because one has to switch to own-damage insurance cover.
Add-on covers only offer covers for specific parts of the vehicle, and it is good to check with your company if it has such offers. Agarwal of Digit insurance states that add-ons, for instance, zero-depreciation covers are more significant for electric vehicles because many EVs are designed with fiber or plastic. As a result, they wear off quicker than those made of metal. That is why one has to buy a comprehensive cover to avoid future surprises.