In the last few years, the automobile sector in India has undergone some profound shifts. Increased use of electric vehicles, cutting-edge advancements in vehicle communication, and the digitalization of formerly analogue processes are just a few examples of these shifts.

The widespread transition to EVs stands out as the most significant of these shifts (EVs). There was a COVID-19 pandemic in India, but that didn’t stop EV manufacturers from selling 5,32,485 vehicles in the country during the past two fiscal years. In the years between 2021 and 2023, this number is projected to grow by 26% due to the Government’s encouragement of fully electric transportation and growing gasoline prices.

Consequently, if you need a new automobile soon, you should investigate the cutting-edge EV possibilities available. The vast majority of India’s best-known car manufacturers now provide clients with electric models. You have your pick of several excellent models produced by well-known automakers.

If electric vehicles are so safe, why do they require such high premiums for insurance?

Although the price differential is narrowing, electric and hybrid vehicles (which combine gas and battery-powered engines) still often cost more than conventional gas-only vehicles. In most cases, the higher the purchase price of a vehicle, the higher the insurance premium will be. There are fewer moving components in modern electric vehicles compared to conventional autos, yet these parts can be costly. Damage to the battery pack usually necessitates the implementation of additional safety procedures, which might drive up the cost of repairs. Also, unlike with conventional cars, repair shops for electric vehicles are scarce. As a result, the certified facilities may ask for a higher fee to make the necessary repairs due to the specialised expertise needed.

With the increased risk of a claim involving an electric or hybrid vehicle, insurers will likely raise premiums for drivers of these vehicles. This added danger is not the result of the driver’s actions but rather the result of in-car electronics. Despite the fact that electric vehicles are currently some of the most expensive automobiles to insure, it is expected that as their popularity develops and more parts and trained mechanics become available, the cost to repair them, and hence insurance premiums, will decrease.

Reasons for High Premium Cost

The price of insurance for electric vehicles can be affected by a number of different variables. The premium for covering an electric vehicle depends heavily on these aspects.

Here are the main causes for the higher insurance costs associated with EVs.

• The cost of electric vehicles is higher

Electric vehicles (EVs) have a greater replacement cost than gas- or diesel-powered automobiles, which contributes to higher insurance premiums. Electric vehicles (EVs) have state-of-the-art hardware like high-capacity batteries, high-tech vehicle components, and more. Consequently, the IDV and premium go up in tandem with the price of an automobile.

• Costly components for electric vehicles

The lithium-ion battery is the most expensive component of an electric car, despite the fact that there are fewer moving parts overall. They make up more than half of the total price of the vehicle. Batteries are expensive to repair or replace, which contributes to increased insurance costs.

Automakers are working to lower the price of these batteries. The insurance rate is anticipated to decrease as battery costs go down.

• Replacing a battery in an electric vehicle is a frequent service

Electric vehicle batteries degrade and eventually quit operating after a certain period of time. Over time, you might need to continually swap out the batteries. Lithium-ion batteries’ high cost of production means that their replacement will be expensive, driving up the cost of insurance. Insurance rates can go down if battery replacement intervals are shortened.

• Professionals skilled in repairing electric vehicles are becoming increasingly scarce

Due to the high cost and complexity of electric vehicle components, regular maintenance is essential for these vehicles. Expert mechanics are needed to service or repair electric vehicles. There is currently a shortage of qualified candidates when compared to more traditional auto technicians. Due to the high cost of hiring a specialized technician, the labour cost associated with the repair or replacement may be higher.

• Price of insurance for battery-powered cars in India

The Insurance Regulatory and Development Authority of India sets the premium for Third-Party Car Insurance policies, but the premium for Comprehensive Car Insurance policies varies across insurers (IRDAI).

To encourage the use of environmentally friendly EVs, IRDAI has introduced third-party motor insurance prices that are 15% lower than those for private automobiles fueled by gasoline or diesel. Find below the Third-Party insurance premiums for electric cars, as a function of battery size.

How to Lower Electric Vehicle Insurance Premiums?

The following are some steps you can take to locate an affordable insurance plan for your electric vehicle:

One of the most convenient and cost-effective ways to insure your electric vehicle is to do so online. Find a decent and affordable auto insurance policy by narrowing down your options online and comparing their coverage, deductibles, and other features.

• Installing security features like an anti-theft device and safety locks in your electric vehicle is another option to lower your insurance prices. These accessories make EVs safer and less tempting targets for thieves. For automobiles equipped with anti-theft systems, insurance companies typically offer discounts on annual premium renewals.

• Opt for a higher optional deductible. This is the amount the policyholder will have to pay out of pocket in the event of a claim. If you choose a higher out-of-pocket deductible on your own, your insurance premium will be cheaper. The likelihood of filing a claim should be low if you are a careful driver and have a recent model vehicle. You can choose a higher deductible on your car insurance if you’re in this situation.

• Take advantage of the no-claim incentive: insurance providers often reward customers with a no-claim bonus after a year in which no claims were filed. This reward may come in the form of lower premium payments or a higher guaranteed payout. As a result, your likelihood of filing a claim will be reduced if you are a careful driver who regularly performs routine maintenance on your vehicle. For every year you don’t file any claims, you’ll get a bonus. Insurance rates for EVs can be lowered thanks to the driver’s cumulative no-claims bonus.

Taking a look at the benefits and drawbacks of EV coverage

Benefits of Having an Insurance for your Electric Cars:

• Your insurance policy will pay for the medical bills and repair costs of any injured parties or damaged property that you may have caused.

• If a fire, natural disaster, riot, or theft causes significant damage, the insurance company will pay a large portion of the restoration costs. This eliminates the risk of having to pay for costly repairs out of pocket.

• We guarantee full financial compensation in the event of any unforeseen circumstances, including death, bodily injury, or partial or entire disability as a result of an accident.

Disadvantages of Having an Insurance for your Electric Vehicle:

• Insurance rates for electric vehicles are higher than those for conventional internal combustion engine vehicles (ICE vehicles) since electric vehicles are more expensive to replace than conventional vehicles.

• The car’s numerous components are quite pricey. Most of the cost associated with an electric vehicle comes from its battery. There is a shelf life to a car’s battery, and since it’s expensive to replace or repair, most people opt to get a new one before their old one gives out on them, even if it means paying more for their auto insurance.

Electric vehicle maintenance and repair is not something that can be done by just any old mechanic. In India, traditional car mechanics are more common than those who are trained to work on electric vehicles. Because of all of these issues, the labour expenses associated with replacing or repairing electric car parts are considerable, which contributes to the high cost of insurance for these vehicles.

Top 24 Electric Car Insurance Companies in India

S no.	Electric Car Insurance Company	Motor OD Claim Settlement Ratio FY20
1	IFFCO Tokio General Insurance	0.953
2	Royal Sundaram General Insurance	0.9266
3	The Oriental Insurance Company	0.9176
4	HDFC ERGO General Insurance	0.9123
5	Universal Sompo General Insurance	0.9078
6	Tata AIG General Insurance	0.9049
7	The New India Assurance	0.896
8	SBI General Insurance	0.8951
9	Bajaj Allianz General Insurance	0.8883
10	Future Generali India Insurance	0.8869
11	Bharti AXA General Insurance	0.8799
12	ICICI Lombard General Insurance	0.8771
13	Liberty General Insurance	0.98
14	Cholamandalam MS General Insurance	0.8589
15	National Insurance Company	0.8571
16	Edelweiss General Insurance	0.8452
17	Reliance General Insurance	0.8426
18	Acko General Insurance	0.8391
19	United India Insurance Company	0.8293
20	Kotak Mahindra General Insurance	0.8281
21	Go Digit General Insurance	0.8047
22	Magma HDI General Insurance	0.796
23	Shriram General Insurance	0.7726
24	Navi General Insurance	0.762

Conclusion

In the coming years, electric vehicles should become more accessible to a wider range of consumers due to the rapid development of related technologies. However, at this time, these automobiles have a higher purchase price and a higher annual maintenance cost. Because of this, the annual premiums for CAR INSURANCE RENEWAL have increased by several thousands of dollars. Because automakers are making significant efforts to reduce the cost of producing electric vehicles, it is possible that consumers will be able to purchase such vehicles at more competitive prices in the near future. This will also assist to lower the overall cost of the insurance.