Electric vehicles are quiet; What about insuring them?

Experts agree that vehicles with internal combustion engines are a significant contributor to environmental pollution, leading to a growing need and demand for EVs.

“Electric vehicles have come about as a clean energy initiative, as they offer low or zero emissions and have become an important 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 motor insurance for electric vehicles,” said Indranil 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 to encourage the use of electric vehicles.

“The Indian government is also levying 5% GST for electric cars, which is lower as compared to vehicles powered by internal combustion. Chatterjee said the impetus for manufacturing of electric vehicles has started and the government is moving towards a promising future.

The authorities have also provided 1.5 lakh tax benefit under section 80EEB for interest paid under EV car loan.

Ankit Agarwal, CEO and Co-Founder, InsuranceDekho.com said, “These e-vehicles can be a bit expensive compared to other motor vehicles, but they have their own advantages. These include lower operating costs, minimum pollution to the environment and most importantly, savings on petrol and diesel.”

However, with the high cost of the vehicle, it becomes important to keep it insured to stay financially secure in case of any unfortunate event.

To help you make the best decision to buy an EV insurance policy, here are some factors that you should consider.

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

Also, with personal accident cover, you can be financially secure in case of any misfortune. This includes uncertainties such as bodily injuries, partial or complete disability due to accidents, and accidental death.

Insured Declared Value: IDV is the amount that you would be eligible to receive from the insurance company in case of total loss of the electric vehicle. Lower IDV means lower premium and vice versa. This is an essential factor to consider while buying EV insurance so that you are not offered a lesser amount in case a total loss claim happens in future. Also, since the cost of an electric vehicle is very high, it becomes more important to consider this factor.

Price: The second most important thing to consider while buying EV insurance is the premium. This is the amount that you would need to pay to get coverage benefits under the insurance policy given by the insurance company. Since premiums have to be paid periodically, you should choose a policy that comes at an affordable premium. However, you should not compromise on coverage benefits to save on insurance premiums.

Claim Settlement Ratio: The CSR of an insurance company is an important factor that must be considered as it talks about the performance and how good the insurer is at handling claims. It is recommended to choose an insurance company that offers a smooth claim settlement process so that you can get the most out of your policy in case of a claim.

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

You can include zero depreciation cover in your electric vehicle insurance policy with which the claim amount on account of depreciation is waived off and the full amount of the loss is paid. The premium for these add-ons may vary from insurer to insurer.

“It is suggested that consumers take add-on cover for e-vehicles as the cost of battery and specialized components can be expensive for these vehicles. The risks of battery charging damage, battery leakage, damage to charging connectors, vehicle towing and providing on-site assistance should be investigated in the form of add-on covers, Chatterjee said.

While electric vehicles are at an early stage in the Indian market, they are fast emerging and will soon capture a decent share of the personal vehicle market share. This is a segment that will benefit the consumers as well as the environment alike.