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India’s automotive sector sees a rise in EVs, leading the insurance industry to create specialized EV insurance models. Discover the myths and facts about EV insurance.
The 2024 value of the market has reached USD 11.36 billion and experts forecast it will reach USD 1,053.10 billion by 2034 at a rate of 57.3%.
The automotive sector in India currently resides in the middle of a revolutionary period where electric vehicles (EVs) are gaining prominent attention. The insurance industry is also following EV popularity growth by adapting to a specialized insurance model for this new market segment. This specialized insurance coverage has been gaining increasing demand due to growing consumer demand in the EV category.
The 2024 value of the market has reached USD 11.36 billion and experts forecast it will reach USD 1,053.10 billion by 2034 at a rate of 57.3%. In a rapidly growing industry, there are usually possibilities of mistakes and learnings, both for insurers as well as for consumers. Since the insurance in EV industry, is still at a nascent stage, consumers should be aware of some myths and facts, so that their purchase decision is favourable for them.
Below are some of those myths and facts:
Myth: Buyers believes EV insurance policies are overpriced.
Fact: The present market condition shows that EV insurance costs exceed traditional ICE vehicle premiums, but they are approaching parity as the market continues to develop. The primary cost drivers for EV insurance stem from expensive battery components, alongside the necessity for specialized technicians and restricted availability of dedicated parts in certain regions. The rising number of EVs and its related facilities is helping in bringing down the premiums from insurers. Many insurance providers are implementing discounts for EV policyholders, as they are recognizing the long-term cost benefits from lower maintenance needs and diminished fuel expenses as well as governmental promotional programs for EV use.
Myth: EV insurance do not protect against battery-related issues.
Fact: EV insurance policies offer protection for battery damage which becomes valid under certain conditions such as accidents, theft, and natural disasters. The costs associated with repairing or replacing damaged EV batteries come under comprehensive and collision coverage. Insurance plans covering theft have provisions to pay for stolen vehicles together with their batteries. Insurance plans which provide protection during natural disasters such as flooding or storm damage or fires, extend financial protection for EV components that are affected.
Myth: EVs Are Accident-Proof Due to Advanced Safety Features and insurance policies don’t cover those risk
Fact: The reality is that Electric vehicles (EVs) possess automatic emergency braking, with lane-keeping and adaptive cruise control as safety features; yet they do not eliminate accidents. EV drivers experience specific dangers because their vehicles operate quietly at slow speeds causing difficulties for pedestrians and cyclists to detect them while high torque speeds can deliver unexpected power to new drivers. Insurance assessments become more complex because lithium-ion battery fires require training-specific fire fighting procedures. EV insurance policies include motor liability protection and personal injury coverage and damage protection just as traditional auto insurance does, and sometimes extend beyond basic coverage to address specific EV charging issues and software malfunction risks.
Each well-organized EV insurance policy in India features protection from Own Damage Cover for accidental incidents and theft and fire and natural disasters while providing Third-Party Liability for legal claims due to damage to others. Many insurance policies extend Battery Coverage for accidental damage or theft incidents as well as include Charging Equipment protection for residences. The essential road service feature in insurance plans provides emergency assistance which enables towing services along with same-site maintenance and rapid charging facilities.
The Indian EV insurance sector is encountering multiple hurdles from substantial purchase expenses, combined with restricted charging options and non-standardized power system technologies. These factors are affecting insurance plan construction and cost determination. However, insurance companies now offering innovative plans with battery lifespan warranties along with dedicated roadside services, while government financial benefits are creating easier access to EVs which is building up the insurance needs. The growth of the EV insurance market will be accelerated by better batteries and charging systems which will eventually result in lowered risks and lower premiums.
It is authored by Shishir Sandipan, Associate Director- Corporate Solutions Group, Alliance Insurance Brokers
The views expressed in this article are those of the author and do not represent the stand of this publication.
