What Are the Reasons for Electric Cars Insurance is Expensive?

With the growth of globalisation, there has been a trend for sustainability. Like other countries, the Indian automobile sector is undergoing a major change with the new technological integrations. Indian citizens have taken an interest in electric vehicles (EVs). This is evident as this industry currently has a CAGR of 66.52% in India. While these cars are eco-friendly, they can be highly expensive.

Do you often wonder why electric cars insurance Is expensive? Find out all about it from this article.

You might be looking for the reasons for increased expenses of Electric Cars Insurance in India than regular vehicle insurance. This is usually a liability for the owners of EVs. Here are the main reasons responsible for the growing expenses of such policies.

• Expensive Products: To begin with, EVs are more expensive than regular cars, as they run on batteries and not on fuels. Car manufacturers have developed such batteries to reduce the expenses of recharging fuel in cars. Moreover, these cars contribute to reducing pollution in the environment. They are naturally more expensive as more technological developments have gone into their creation. Insurance policies to protect these are, therefore, more expensive.
• Car Batteries & Replacement: There are powerful car batteries responsible for running EVs, usually with an expiry date. As an owner, you must replace this battery, so the car works properly. Such cars usually come with lithium-ion batteries, which can be highly expensive. Premium rates for such cars can be high, as the insurance provider might have to replace their batteries in case of any damage.
• High Maintenance Cost: It is always more expensive to maintain an EV than a regular car. As these cars are more expensive, with better technology and infrastructure, their spare parts are also more expensive than regular fuel cars. Repairing a damaged EV can therefore be expensive, which is another reason behind the growing rates of the insurance premium for such vehicles.
• Lesser Mechanics: EVs are made of complicated technologies. There are few eminent EV manufacturers in India. If they are damaged, repairing them can be a major challenge if the mechanics are unfamiliar with such vehicles. Currently, there is a lower availability of mechanics who can repair EVs than regular vehicles. This will likely increase premium rates, as insurers have to spend more time and energy looking for such mechanics.

People often wonder why electric cars insurance is expensive. The Insurance Regulatory and Development Authority of India (IRDAI) is mainly responsible for setting the premium rates for third-party liability insurance policies. Currently, IRDAI offers a 15% discount on the premium charges of EVs compared to regular engine vehicles to promote the usage of EVs in India. The insurance cost of these vehicles is listed below.

If you own an EV, it is essential to get an insurance policy to avoid any future problems. While getting an insurance policy, you will need to share the following details with your insurer.

• Car Model: You need to share the details of your EV model with your insurance provider. The Insured Declared Value (IDV) will be set, keeping this model's current demand and market price.
• Car’s Manufacturing Year: You will also need to know the manufacturing year of your EV and inform your insurer about the same. It will help the insurer calculate your vehicle's depreciation value.
• Location: The insurer must also know your location while preparing your policy. Few locations are high-risk areas, while others are relatively at a lower risk. The premium rates in the high-risk areas will be higher than that in the low-risk areas.
• Vehicle Usage: Your insurer will ask you about the vehicle's purpose, and you need to inform if your car will be used for commercial or personal purposes. The usage purpose will play a part in calculating the premium amount.
• Contact Details: You need to share your contact details with your insurer for multiple reasons. The insurer must send you OTPs, updates, and notifications about your insurance claims, due dates, and so on. It is, therefore, essential information that you must share with your insurer.

Now that you know how expensive electric car insurance policies are, you might need to know how to find a lower-cost insurance policy. Here are the ways that can be beneficial if you cannot afford high premium rates.

• Purchase Online: Various online platforms enable you to check various types of insurance policies from various organisations. You can compare their policies, services, premium rates and add-ons from such platforms. It helps you get access to multiple insurers' details and avoid settling for a convenient one. As a result, you can choose the most affordable offer for your vehicle.
• Utilise Accumulated NCB: Insurance providers offer a discount for not claiming an insurance policy for about a year to the policyholders in the form of no-claim bonuses (NCB). This discount is usually up to 10%. While it might seem small, it can add up to 50% if you do not claim your insurance for about five years. This will help you get a large discount on EVs' high premium rates of insurance policies. Make sure to utilise an NCB.
• Avoid Small Claims: Raising claims for minor damages will reduce your chances of utilising the NCB. If you have minor EV damage, try to repair it yourself. Claiming insurance benefits for such issues will not allow you to save your claims for a year, preventing you from getting the benefits of NCB.
• Use Anti-theft Devices: Anti-theft devices are now commonly available for vehicles. Installing these in your EV will help you prevent the possibility of car theft. Moreover, if you have such a device installed, it sends a message that you are trying to protect your car. When your insurance provider sends an inspector, you will receive a discount if your car has an anti-theft device.
• Choose Voluntary Deductible: While purchasing an insurance policy, you will come across an option for a voluntary deductible. It is a fixed amount that a policyholder chooses to pay voluntarily during insurance claims. Selecting a voluntary deductible limit will reduce the claim liability of your insurer, and it can help you get a discount on the premium rates. Choose this option if you have lower chances of raising insurance claims.

 

Hopefully, that gives you a basic idea about why electric cars insurance is expensive. As this article pointed out, EVs are more expensive to manufacture, which accounts for a higher premium for their insurance policies. However, if you cannot afford these, you can use the tips mentioned here to find the lowest premium rates on EVs in India.