With several reports of electric scooters catching on fire in the country, the question is, are the damages caused by such incidents covered? motor insurance Or not.
A third party insurance policy Does not cover fire damage. “There are two types of insurance policies in India: comprehensive and third-party. While the former provides fire cover, the latter does not,” said Indranil Chatterjee, co-founder of Renewbuy.
Adarsh Agarwal, Chief Distribution Officer, Digit Insurance agreed and said, “Claims arising out of fire are covered under a comprehensive motor insurance scheme which includes Own Damage (OD) cover apart from third party liability cover. ”
However, merely buying a comprehensive policy does not guarantee cover as the payout largely depends on the cause of the fire. If the fire is caused due to breakdown of any of the components of the EV then the claim will be rejected. “If the vehicle catches fire due to mechanical defects like fuel leakage, oil leakage, engine overheating etc., the user will face claim rejection. Similarly, insurers will not consider claims if there is a spark or tear from the vehicle’s battery. Electric wiring system,” Chatterjee said.
While the reasons for the recent EV fires are not officially known, several experts have claimed that thermal runaway, which results in overheating of the battery, could be the reason. If this is true, then your claim may be rejected.
Aggarwal said that apart from mechanical defects, if any modifications are made to the vehicle which tamper with its original construction and contribute to the fire, the claim can get rejected. “It is advised not to opt for modifications by unauthorized dealers as such changes may not add to the Insured’s Declared Value (IDV) of the vehicle.”
According to experts, there have been few instances of EV’s detachable battery exploding while charging and hence would not be covered under a standard policy. “Technically, the insurance policy covers the components that fit the insured vehicle in the right place. Hence, if the batteries do not fit in the vehicle, it cannot be covered,” said RKT Krishnan, head-motor claims, Royal Sundaram General Insurance.
The claim you get will depend on the damage caused to the vehicle. “If the vehicle is repairable, the insurance company will pay for the replacement of the damaged parts under an acceptable claim, subject to a deduction as per the terms and conditions of the policy. If the vehicle is burnt beyond repair, the policyholder will receive the IDV under an admissible claim, subject to deduction as per the terms and conditions of the policy,” Krishnan said.
“It is advisable not to go for low IDV as the premium may be low as it will affect the payment of claims,” Agarwal said.
Also, the part that caused the damage is not covered. “While proximate cause is not covered, consequential loss can be covered. For example, if the wiring was bad and it caused a short circuit which resulted in the vehicle burning down, the wiring would not be covered,” Chatterjee said.