Is Electric Car Insurance Expensive?

The short answer is yes. Electric cars insurance premiums are 20-25% higher in comparison to their petrol or diesel variants. While driving an EV (Electric Vehicle) is relatively cheaper, its upfront cost and the insurance premium can be considerably higher. This article breaks down why electric car insurance costs more and how it compares to other cars in India.Read more

How Much Does Electric Car Insurance Cost in India?

A common question among new EV buyers is, "What are the insurance costs for electric cars?" To give you a clear idea, let’s first have a look at the mandatory Third-Party (TP) insurance rates for EVs set by the Insurance Regulatory and Development Authority of India (IRDAI). These rates are fixed, applicable for a 1-year policy, and based on the EV's battery capacity.

Third-Party EV Insurance Cost as per Battery Capacity (kWh)

• Less than 30 kWh: Rs. 1,780
• Above 30 kWh & Below 65 kWh: Rs. 2,904
• Above 65 kWh: Rs. 6,712

Comprehensive EV Insurance Cost

A comprehensive insurance plan, which covers both third-party liabilities as well as damages to your own vehicle, is what makes insurance more expensive for electric cars. Here is the comparison of insurance costs for some of the most popular EVs in India versus their petrol variants. These prices are for a brand-new vehicle with zero No-Claim Bonus (NCB):

The table clearly highlights that the comprehensive insurance premium for the Tata Nexon EV is around Rs. 9,400 more (per year) than its petrol variant, mainly because of the costlier own-damage component of the policy.

Key Differences Between Petrol/Diesel and Electric Car Insurance Premiums

Here are the major differences between the insurance costs of electric cars and petrol or diesel vehicles:

Why is the Electric Car Insurance Expensive?

There are several other reasons behind the higher electric car insurance cost in India. Have a look:

1. Higher EV Cost

   Since EVs cost more to manufacture, mainly because of expensive lithium-ion batteries and imported electric components, their market price is higher, leading to an increased IDV and, consequently, a higher comprehensive EV insurance premium.

2. Expensive Battery Replacement

   An electric car's most expensive component is its battery pack. It makes up around 30% to 40% of an EV's total manufacturing cost. Any accidental damage to the battery or if it gets flooded during monsoons can lead to costly replacements. This, in turn, results in increased premium costs due to a greater liability of the insurer.

3. Fewer EV Mechanics

   EVs do not have traditional components like a clutch, gearbox, or an engine. Instead, they feature high-voltage electrical systems. Repairing these requires highly skilled mechanics and special tools. Because of fewer EV-trained mechanics compared to traditional ones, the labour costs for repairing EVs are higher, which results in increased EV insurance premiums.

4. High Maintenance

   Although EVs require less routine maintenance, their accidental repair parts, such as charging ports and electric motors, are expensive and often need to be imported. Thus, it results in a higher claim payout, due to which the premium cost is higher.

How to Keep Your Electric Car Insurance Cost Lower?

You can take these practical steps to lower your EV insurance cost:

1. Compare and Buy Online

   The online process allows you to compare EV insurance plans from different insurers, view coverage, and choose a policy that fits your budget without paying any commissions.

2. Consider Usage-Based Insurance (UBI) Plans

   If you use your EV for short commutes, consider Pay-as-you-Drive insurance, where you pay the premium only for the kilometres you drive instead of a fixed annual cost.

3. Do Not Raise Small Claims

   By paying for minor repairs from your pocket, you can retain your No Claim Bonus (NCB) discounts, which helps lower your EV insurance renewal premium.

4. Install Anti-theft Devices

   Another way to keep your EV insurance costs low is to install anti-theft devices approved by ARAI. These devices reduce the risk of your vehicle getting stolen, which allows insurers to offer you a discount on your policy premium.

Wrapping It Up!

As the EV ecosystem in India matures and battery prices decrease, electric car insurance costs are likely to normalise. Until then, you can keep your premiums low by utilising your NCB discounts while renewing your EV insurance, estimate your premium cost beforehand using a car insurance premium calculator, and choose a policy that best matches your driving habits.