Electric Vehicle Insurance vs. Conventional Vehicle Insurance

Electric Vehicles (EVs) and the conventional Internal Combustion Engine (ICE) vehicles may serve similar purposes, but their insurance policies can differ in coverage, premiums and repair requirements. As EVs become more common in India, knowing these differences is important when choosing a policy. This guide compares electric vehicle insurance with conventional car insurance to help you understand what sets them apart.Read more

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

Here are the distinctions between insurance for electric vehicles and that for conventional fuel-powered vehicles:

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 traditional mechanical parts.

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

The premium prices for electric car insurance are generally 10% to 20% more than petrol or diesel cars, when compared to model-for-model. Here is why:

• 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?

Car 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 add-on: The battery protect cover 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.
   • Electric motor cover: Some insurers also offer coverage for the repair or replacement of the EV's drive motor and electronics when damaged by water exposure, short circuits or voltage spikes.

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.
   • Roadside assistance: Also known as breakdown assistance, this add-on is highly useful for those who often drive in remote areas or go on long trips.

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 insurance 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, which leads to a smoother car insurance claim process with swift settlements.

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.

Car insurance companies 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.

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.