Home / Money / Personal Finance /  Electric vehicles are cool; what about insuring them?

Many automobile companies are gearing up to launch electric vehicles (EVs), and some are out with their e-vehicles already. Industry experts believe that with increasing consumer awareness and strict emission norms, the demand for these e-vehicles may continue to increase in the coming years.

Experts believe that internal combustion engine vehicles are vital contributors to environmental pollution, leading to the growing need and demand for EVs.

“Electric vehicles have come as a clean energy initiative, as they offer low or zero emissions and have become a vital part of OEM (original equipment manufacturer) business strategies. Along with the growth in the EV segment in the country, there will be a huge demand for motor insurance for electric vehicles," said Indraneel Chatterjee, co-founder, RenewBuy, an online insurance aggregator.

In March 2020, the Insurance Regulatory and Development Authority of India (Irdai) announced that insurers would offer a 15% discount on third-party motor premiums for electric vehicles to incentivize their use.

“The government of India is also charging GST at 5% for electric cars, which is way lower than the internal combustion-powered vehicles. The impetus for the manufacture of electric vehicles has begun, and the government is moving towards a promising future," said Chatterjee.

Authorities have also provided 1.5 lakh tax benefit underSection 80 EEB for interest paid under EV car loan.

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Ankit Agrawal, chief executive officer and co-founder,, said, “These e-vehicles may be slightly expensive compared to other motor vehicles, but they have their own set of advantages. These include low operational cost, cause minimal pollution to the environment, and most importantly, save on petrol and diesel."

However, with the higher price of the vehicle, it becomes crucial to keep it insured to stay financially protected in case of an unfortunate event.

To help you make the best decision for buying an EV insurance policy, here are some factors that you must consider.

Coverage: The most important thing to consider when buying EV insurance is to check the coverage features offered under it. As the parts of an electric vehicle are comparatively expensive, you must purchase adequate insurance cover for them. If you buy a comprehensive insurance policy, it will typically protect you against third-party liabilities and other own damages (OD) cover. OD coverage can help you avoid expensive repair bills in case of accidents, natural calamities, riots, fire, as well as losses due to theft, etc.

Also, with a personal accident cover, you can be financially secured in case of any misfortune. It includes bodily injuries, partial or total disabilities due to accidents and uncertainties such as accidental death.

Insured declared value: IDV is the amount that you will be eligible to receive from the insurance company in case of a total loss of the electric vehicle. A lower IDV means a lower premium and vice versa. It is an essential factor to consider when buying EV insurance so that you are not offered a lesser amount in case a claim for total loss arises in the future. Also, since an electric vehicle costs a lot, this factor becomes more significant to consider.

Premium: The other most important thing to consider when buying EV insurance is premium. This is the amount that you will be required to pay to the insurance company in order to avail of coverage benefits under an insurance policy offered by them. As the premium is to be paid periodically, you must choose a policy that comes at an affordable premium. However, you should not compromise the coverage benefits in order to save on insurance premiums.

Claim settlement ratio: CSR of an insurance company is an important factor to consider as it talks about the performance and how good an insurer is in handling claims. It is recommended to choose an insurance company that offers a smooth claim settlement process so that you are able to make the most of your policy in case of a claim.

Add-ons: These are additional benefits that can be added at the time of EV insurance policy purchase by paying an extra premium to enhance coverage. You can include the add-on covers as per your budget and requirements under a comprehensive insurance policy.

You can include zero depreciation cover to your electric vehicle insurance policy with which the claim amount made due to depreciation is waived off and the complete amount of damage is paid. The premium for these add-ons may differ from one insurer to another.

“It is suggested that consumers take add-on covers for e-vehicles as battery costs and specialized components can be costly for these vehicles. Risks of battery charging damage, battery leakage, damage to charging connectors, vehicle towing and providing on-site help, should be examined as add-on covers," said Chatterjee.

While electric vehicles are at a nascent stage in the Indian market, they are fast emerging and will soon capture a good pie of the private vehicle market share. It is one segment that will equally benefit consumers as well as the environment.

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