Why your EV insurance premium is costlier and features you must have in EV motor insurance policy

Time of India

28-04-2025

Driven by the need to save money and the environment, many people have switched from internal combustion engine (ICE) to electric vehicles (EV) in the past few years. However, considering the overall cost of ownership is important as it may overshoot your estimate and render its running financially infeasible. One component that spikes the EV cost is insurance, which is higher than that for regular ICE vehicles.
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While third-party insurance is mandatory for all cars and the premium gap for EV and ICE cars isn't too large, the own damage component is higher for EVs. The overall absolute premium shoots up for a variety of other reasons. 'This is because of higher purchase prices that result in higher replacement costs, costly specialised parts (especially traction battery), higher repair costs that call for specialised technicians and lack of repair networks with expertise in EVs,' says Neel Chheda, Chief Underwriting & Data Science Officer, TATA AIG General Insurance.
Though most insurers peg the premium for EVs to be marginally higher at 15-25%, a quick check at online insurance portals like Quickinsure and Policybazaar shows that the premium for EVs is typically 25-60% higher than that for ICE vehicles. For instance, the premium difference for Tata Nexon's base models in petrol and EV categories is nearly 54% for comprehensive insurance, including third party and own damage components.
by Taboola
by Taboola
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How insurance differs for EV & ICE vehicles
What's the cost difference?
While third-party cost is only marginally higher, the absolute premium shoots up for EVs.
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Reasons for higher insurance cost of EVs
Here are some factors that result in higher insurance for electric vehicles.
Purchase price:
A big reason for higher EV insurance is the cost of the vehicle itself as EVs are 12-30% more expensive than ICE vehicles. Since the market value of EVs is higher, it translates into higher insured declared value (IDV), which in turn leads to higher premiums.
Battery cost:
'Battery replacements represent a substantial financial burden, accounting for 50-70% of the vehicle's total cost for most key models in India,' says Mayur Kacholiya, Head, Motor Product, Digit General Insurance. 'The cost of replacing battery alone can go up to Rs.7 lakh, depending on the vehicle model and battery capacity,' says Subhasish Mazumder, Head, Motor Distribution, Bajaj Allianz General Insurance. Hence, the risk of damaging it will result in a higher premium.
Repair cost:
'Repair costs for high-voltage batteries and motors are significantly higher in EVs because most original equipment manufacturers (OEMs) do not offer child parts for these components,' says Gaurav Arora, Chief Reinsurance, Underwriting & Claims for Property & Casualty,
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. Electric motors in EVs generally have a long lifespan and require less frequent maintenance than ICE vehicles, but when repairs are needed, they can be significantly more costly, says Mazumder.
'Besides, the infrastructure for EV repair, including service centres and availability of specialised tools and equipment, is still developing. Also, there's relative scarcity of skilled labour proficient in handling the unique complexities of EV systems, which can lead to longer repair times and higher labour costs,' adds Kacholiya.
Cover features to include
Given the advanced technology used in EVs, a comprehensive insurance policy can prevent significant financial burdens. Car owners should be especially mindful of the battery, which is not only the most critical component of the vehicle, but also one of the most expensive, says Mazumder. Besides, ensure the policy includes mechanical and electrical breakdown coverage, and protection for digital systems.
Battery protection & charging supplies:
Battery damage is usually the top reason for claims in EV vehicles mainly due to floods and inundations. Says Kacholiya,'The most frequent issues in EVs leading to insurance claims is flood damage resulting in battery failure and a higher frequency of fire loss claims.'
'This is why first and foremost, thorough battery coverage is essential since it guards against losses arising out of risks like accidents, natural calamities and malicious acts. Along with your charging supplies included with the vehicle, you also need to make sure portable cables and home chargers are insured,' says Chheda.
Zero depreciation:
Due to the advanced and expensive parts used in EVs, repairs can be very costly and this feature can help you claim the amount required for replacing or repairing parts without deducting depreciation, minimising out-of-pocket expenses.
Roadside assistance:
This can help you get back on the road by either swapping your battery or arranging for mobile charging. Since EVs are heavier than ICE vehicles, they also need special machines for towing.
Exclusions
'Depreciation, which refers to the normal wear and tear of EVs due to usage over time, is not covered. Similarly, any intentional damage caused to the vehicle is explicitly excluded from coverage,' says Mazumder.
'Beyond the standard exclusions common to all vehicle insurance, EV insurance may have specific exclusions related to battery. Claims could be rejected if battery charging or maintenance doesn't follow OEM guidelines, or if unauthorised repairs are done without prior approval,' says Kacholiya.