Insurance for Electric Vehicles in India: An Easy Guide

Are electric vehicles (EVs) a popular option in India? Let’s dive into some facts for clarity. The Economic Survey of 2023 pegs India as the third largest automobile market in the world in terms of sales, surging ahead of Germany and Japan. Worldwide, there is a greater push for auto manufacturers to shift towards greener options. 

India’s EV Market Poised For Growth: Delhi Tops EV Sales in 2022

Given that the automotive sector is a notable contributor to the Indian economy, the Economic Survey 2023 forecasts that India’s domestic EV market is poised to touch 49 percent CAGR from 2022 to 2030. In December 2022, EVs contributed to around 16.8 percent of all vehicle sales in Delhi alone, thereby indicating a Y-o-Y growth of approximately 86 percent. As per government data in August 2023, the number of EVs in India touched around 847,439 in FY23.

As the government is offering attractive incentives to bolster the push for EVs, many insurers are offering specialised EV cover plans that make it entirely unique and different from conventional car insurance. With growing preference for Electric Vehicles (EVs) set to grow as an eco-friendly, low maintenance and cost-effective option, this shows how people’s preference for buying and driving cars is shifting towards environment-friendly options. For InsurTechs in India, this marks an opportunity to tap into a fast growing market with customised solutions that are powered by technology. 

Do Electric Vehicles Need Insurance in India?

Yes! As is the case when buying any vehicle in India, insurance is required for EVs too. Third-party insurance is mandatory for EV users as well. This ensures that EV users will be insured against any liabilities that arise due to third-party injury or damages caused by an electric vehicle, regardless of who is at fault for the same. Most EV insurance plans also offer extra coverage for battery charging equipment, battery warranties, and comprehensive protection against environmental hazards. To safeguard the vital components of an EV, insurers in India offer specialised products that ensure car battery coverage.

A notable EV insurance add-on is the return-to-invoice cover which provides compensation equivalent to your EV’s original value in case of any irreparable damage or theft. For instance, in case your EV is stolen and the police are unable to find and recover it, the RTI cover ensures that you will receive the total invoice amount as compensation.

Insurers in India Offer Specialised EV Insurance Coverage 

Few reasons why EV insurance coverage is different from that of conventional cars:

• EVs are more expensive than conventional cars which means their insurance structures are different and tend to be higher as these are more susceptible to damage

• Cost repairs for EVs are much higher

• Unlike conventional insurers, InsurTechs provide all types of coverage including bundled long-term cover

• EV auto parts are costlier as these are based on the latest technology and replacement or repair costs are highly expensive as compared to conventional vehicles

• Premiums for comprehensive coverage is higher on account of high battery replacement costs and high repair costs

• Besides comprehensive coverage, it helps to opt for extra covers such as a depreciation cover, roadside assistance, personal baggage cover, motor protector, conveyance benefit, among others

• Flood protection cover is essential as the battery in an EV is usually placed at the lowest point in the vehicle and in case of floods, the water can damage the EV battery

• Opt for zero depreciation coverage to ensure that any damage caused to your EV’s battery pack does not burn a hole in your wallet

• Opting for a network garage helps EV users to avail cashless claims. At a non-network garage, the full payment would have to be done and reimbursement can be claimed later

Insurers’ Rolling Out Higher Safety Bars for EVs in India

Raising the safety bar higher for EVs requires InsurTechs in India to leverage technology-based parameters to assess how EV manufacturers develop safer designs that suit Indian roads. For instance, in Europe, Australia and Japan, ‘pedestrian crashworthiness’ was made a part of their federal car crash ratings. Simply put, it estimated the precise crash risk that is borne by those who are outside the vehicle. Such global safety measures in the EV space can provide valuable insights for InsurTechs in India to consider while leveraging technology to assess risk.

Clearly, when it comes to electric vehicle insurance, with its unique features and customised add-ons, insurers in India are rolling out highly innovative EV-centric plans that cover various risks including self-ignition, water ingression, emergency transport and hotel expenses cover, among others. The need for smartly tailored EV insurance solutions is growing in India and this is a market that holds considerable optimism for InsurTechs and EV manufacturers, besides regulatory authorities in India that are bolstering this segment with friendlier initiatives.