Know Why Electric Cars Insurance Is Expensive?

Pollution and fuel prices are rising constantly and the only solution to these two problems is electric cars. Electric cars are the future of the automobile industry as they are cost-effective and environment-friendly in nature. Despite all the advantages, EV insurance still remains more expensive than petrol/diesel cars. Let us know the reason behind this further in the article.

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Is Electric Car Insurance Expensive?

The first and foremost purpose of a person purchasing an electric car is its environment-friendly nature, as well as cost-effective runtime. But when it comes to purchasing electric car insurance, the cost of the premium gets really high. One of the major reasons behind the higher car insurance premium of an electric car is that the repair cost of such cars is higher due to the advanced technology used in the car.

Moreover, electric cars may suffer heavy damage because of their lightweight. All of this and many other reasons, automatically increase the liability of the insurer due to which he/she increases the insurance prices for EVs.

Reasons Behind Higher EV Insurance Premium Rates

There are several other reasons behind the higher electric car insurance cost in India. Here are some of them:

1. E-Cars are Expensive

   Due to electric cars run on electric motors, battery packs and transmission modes. The battery pack among these are the most expensive component thus adding to the manufacturing cost of an EV. These batteries are made of lithium-ion which makes electric vehicles expensive in the market.

   Thus the insured declared value of EV insurance also goes higher and increases the premium rates.

2. Car Battery Replacement

   Electric cars are powered by powerful batteries and come with an expiry date. The car owner has to replace the battery before they stop working properly. Electric cars run on lithium-ion batteries. Replacement of these lithium-ion batteries is expensive.

   If the life of the lithium-ion battery is long then the car owner would not have to replace the batteries frequently. The lower the frequency of replacement, the lower the liability of the insurer This will result in lower premium rates of the third-party car insurance policy.

3. High Maintenance

   Electric cars are expensive and they also require higher maintenance. It is because an electric car consists of complex and expensive car parts. Thus, the repairing of e-cars requires high skills to service or repair any damaged part.

   Since there are not many electric car owners in India, the number of mechanics is also lower than the traditional car mechanics. This is why the labour cost of servicing and repairing the electric car is high because the skilled e-car mechanic charges higher than a traditional car mechanic. This in turn results in a higher EV insurance cost.

Third-Party EV Insurance Cost in India

The premium rates for third-party liability insurance are fixed by the Insurance Regulatory and Development Authority of India (IRDAI). As an initiative to promote the use of electric vehicles in the country, the IRDAI has set the third-party liability insurance premium rates at a 15% discount as compared to petrol/diesel engine vehicles.

The third-party insurance rates are based on the capacity of the battery as mentioned in the table below.

The premium rates of the comprehensive insurance policy for an electric vehicle vary from insurer to insurer as they are based on various factors.

Information to Share with Insurer about E-Car while Purchasing EV Insurance

The insurance process for both electric cars and petrol/diesel engine cars are the same but the difference in the premium rates depends on the IDV of the vehicle. So, while purchasing the insurance policy for an e-car, the insurer will ask for some important info related to your e-vehicle. These include:

1. Car’s Model

   The IDV depends on the approximate market value of the car. Hence it is important to tell your insurer about the car’s model.

2. Manufacturing Year

   The year of manufacturing helps the insurance company calculate the depreciation value of the e-car. This helps them assess the Insured Declared Value required for the e-car.

3. Location

   Tell your insurer about the geographic location of your e-vehicle because there are some locations with high and low risk. The premium rates of the insurance policy will be higher in high-risk areas.

Ways to Reduce Electric Car Insurance Cost in India

The premium rates of the e-car vary from insurer to insurer and depend upon the kind of coverage you opt for. Since we are talking about e-cars here, let us tell you how can you keep the premium rates of your electric car insurance lower.

1. Purchase Policy Online

   The first and foremost step an e-car owner can take is to purchase the insurance policy online. When the buyer opts for an online purchase, he/she gets to compare different policies and then chose the one that suits their requirement and budget.

2. Do Not Raise Small Claims

   The policyholder should not raise claims for minor damages as it hinders the chances of getting the No Claim Bonus. Hence it is advised to pay for minor damage repairs out of pocket and not claim them under the insurance policy.

3. Utilize Accumulated NCB

   If you are an old car insurance policyholder and have not raised a claim in your previous years then you must be having a certain percentage of No claim bonus that you can use to reduce the car insurance renewal premium rates for your electric car.

4. Install Anti-theft Device

   When you purchase a car insurance policy, the insurance company sends an inspector to check the condition of the vehicle to be insured. If you would install an ARAI-approved anti-theft device in your car then the insurer will provide you with a certain amount of discount on your car insurance policy.

Wrapping It Up!

Electric cars are slowly becoming popular in India and with the increasing fuel rates and pollution, they seem to take place of petrol/diesel engine cars in a few years. As it is recommended to purchase an EV insurance policy online, you can calculate the premium rates of the policy using a car insurance premium calculator and choose the right plan for your electric car.