Electric Vehicle Insurance vs. Conventional Vehicle Insurance

Electric vehicle insurance vs conventional vehicle insurance— you must have heard it multiple times, but why should it matter? As more people are switching to electric vehicles to support greener living and reduce fuel costs, it is crucial to understand that insuring EVs is quite different from traditional car insurance. They might appear similar, but EV insurance isn’t just a rebranded version of conventional vehicle insurance. The structure, cost, and claims experience can differ significantly. Let’s take a closer look at why this matters, especially when it is time for car insurance renewal.

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Why do EVs and Conventional Vehicles Attract Different Insurance Approaches?

Car insurance doesn't only protect against mishaps, but it also evaluates risk, which depends heavily on what powers your car.

EVs and conventional cars function on fundamentally different systems. EVs rely on lithium-ion battery packs and complex software ecosystems. On the contrary, conventional vehicles operate on internal combustion engines, fuel lines, and mechanical parts.

How is Electric Vehicle Insurance Priced and What Drives the Cost?

You might notice that premiums for EVs are higher, especially when compared to model-for-model with petrol or diesel cars. The explanation isn't as straightforward as it looks. Here is why EV premiums may cost more:

• Battery value: The battery is the most expensive part of the car. It can represent up to 40% of the total vehicle cost.
• Specialised repair: EVs require trained technicians and unique diagnostic tools, which are not yet widespread.
• Imported parts: Some EV components are sourced globally, which increases downtime and replacement costs.
• Higher own-damage (OD) coverage: EVs have higher own-damage coverage compared to conventional vehicles due to pricier repairs, higher purchase cost, and expensive components, like batteries.

But there's a silver lining. EVs benefit from a 15% discount on third-party insurance premiums, as directed by the IRDAI. Some states also waive registration fees and road tax for EVs, indirectly reducing your insured declared value (IDV).

What Keeps Conventional Vehicle Insurance Relatively Stable?

Insurance for petrol and diesel vehicles has been around for decades, and that history brings predictability. Insurers have abundant data on everything from theft patterns to accident rates. This allows them to assess risk and price policies with greater accuracy.

Why this matters:

• Well-established service networks: Repairs can be handled in almost any garage.
• Parts are easier to find: No need to import or wait for special shipments.
• Engine failure risks are well-documented: Insurers know what to expect.

However, as fuel prices continue to rise and vehicles age, conventional insurance may not always remain the more economical option in the long run.

Do Add-ons Differ For EVs and Conventional Cars?

Yes, add-ons do differ for EVs and conventional cars. Electric car insurance offers unique add-ons related to battery protection and charging. But EV insurance and conventional vehicle insurance policies still have some common add-ons, including zero depreciation cover, roadside assistance, and engine protection cover.

Here's what you must know about add-ons:

1. Add-ons better suited for EVs

   • Battery protection cover: This add-on offers coverage for a stolen and damaged battery (caused due to flood or in an accident).
   • Charging equipment insurance: Covers loss or damage to adapters, charging cables, and other accessories.
   • Software cover: Some insurers now offer coverage for software patches and system diagnostics.

2. Add-ons more relevant for conventional cars

   • Engine protect cover: This cover is especially for drivers residing in flood-prone areas where a hydrostatic lock is common.
   • Fuel delivery assistance: Still useful in remote areas or for long-distance drivers.

Is the Claims Experience Different Between EVs and Conventional Cars?

The answer depends on the type of claim. For surface damage, both types of vehicles follow similar timelines. But if an EV's battery is damaged, things can take longer to settle.

EV claim delays are usually linked to:

• Specialised battery diagnostics.
• Complex technology like ADAS (advanced driver-assistance systems) and complex software may be hard to access and require specialist evaluations.
• A limited number of trained service centres.
• Waiting periods for imported parts.

For conventional vehicles, the repair ecosystem is far more evolved, so claims are often settled and resolved more swiftly.

Do Car Insurance Renewal Terms Change for EVs?

On the surface, car insurance renewal works the same way, whether it's an EV or not. You can renew annually or opt for long-term third-party plans (up to 3 years for new cars). But subtle variations exist.

Insurers may adjust the IDV of electric vehicles more frequently depending on battery health or technological upgrades. In contrast, conventional vehicles often follow a fixed depreciation pattern.

Can EVs Get Cheaper to Insure Over Time?

Not really - at least not yet. Electric car insurance is relatively more expensive than conventional car insurance.

While EVs promise lower routine maintenance, insurance pricing is influenced by various factors:

• Battery degradation.
• Claim frequency and repairability.
• Limited long-term data for underwriting.

As more EVs will hit the road and insurers will gather more insightful data, EV insurance pricing may reduce. But for now, owning an EV doesn't translate to lower premiums.

What This Means for Buyers - Should Insurance Influence Your Vehicle Choice?

Choosing between EV and conventional vehicle shouldn't hinge on just the insurance premium. Consider your access to repair services, usage patterns, and whether you are comfortable with newer tech.

If you live in a metro with EV infrastructure and drive mostly within the city, an EV with the right coverage could be a good fit. However, if you usually travel cross-state or have a limited service network nearby, a conventional vehicle might be the more practical choice.

EV Insurance vs. Conventional Insurance - Key Differences at a Glance

Different Vehicles, Different Risks, Same Objective

Whether you own an electric car or a petrol car, getting car insurance will protect you from unexpected vehicle expenses. But your vehicle type matters more than ever today, and so does the protection you choose.

For EVs, think battery health, software risk, and charger safety. For conventional cars, it is still about engine care, fuel access, and well-trodden service routes.

Either way, your car deserves a motor insurance policy that fits like a glove, there is no one-size-fits-all. Your insurance should be as forward-looking as the vehicle it covers.