World EV Day 2021: Electric vehicle insurance – All you need to know

Along with the growth in the EV segment in the country, there will be a huge demand for motor insurance for electric vehicles. Whether one drives petrol, diesel or electric vehicle, insurance is mandatory.

Updated: Sep 13, 2021 1:39 PM
2021 Tata Tigor EV (Image for representational purposes only)

In order to control pollution, Union Minister Nitin Gadkari recently announced a new vehicle scrappage policy in the Parliament- an announcement, which will boost the electric vehicle market in the country. Proposals like National Electric Mobility Mission 2020, Faster Adoption and Manufacturing of Electric Vehicles in India (FAME-II) have also been shared to promote the usage of EVs in the country.

Increased carbon footprint and environmental pollution are some of the major causes of climate change across the world. And internal combustion engine vehicles are one of the key contributors to environmental pollution globally. The automotive industry in India, is in a fast-paced evolution mode, in terms of technology and its ability to tackle environmental issues. Electric vehicles have come as a clean energy initiative, as they offer low or zero emissions and have become a vital part of OEMs’ business strategies. Industry players are creating separate EV business units to meet the surging demand in this segment in the next few years. As per a NITI Aayog report, India could save 64% of energy demand for road transport and 37% of carbon emissions by 2030 by pursuing a policy of shared, electric, and connected mobility.

Tata Motors and Mahindra & Mahindra were the first entrants in the EV market, and Maruti Suzuki plans to enter this space with a small compact EV as its first offering. In March 2020, the Insurance Regulatory and Development Authority of India announced that insurers will offer a 15% discount on motor third-party premiums for electric vehicles to incentivize their use. The Government of India is also charging GST at 5% for electric vehicles, which is way lower than the internal combustion-powered vehicles. The impetus for the manufacture of electric cars has begun and the government is moving towards a promising future.

Insurance and E-vehicles

Along with the growth in the EV segment in the country, there will be a huge demand for motor insurance for electric vehicles. In the motor segment, whether one drives petrol, diesel or electric vehicle, insurance is mandatory.

As of now, there is no separate insurance coverage available for e-vehicles. Currently, they are covered under the same traditional motor-insurance policies which also provide covers for petrol and diesel cars. The current EV insurance policy offers protection for electric vehicles, against accidental damage, injury to the vehicle, theft of the insured vehicle, third-party injury or damages to their property. But with the rise in EV sales, the regulator is expected to bring in changes in the product construct, making it more viable for consumers.

Just like petrol or diesel vehicles, electric vehicles should be insured under mandatory third-party insurance. For the overall protection of the electric vehicle, one can opt for a Comprehensive Insurance Plan that comes along with Third-Party Insurance and Own Damage cover.

It is also very important to take add-on covers for e-vehicle 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. While electric vehicles are at a nascent stage in the Indian market, it is 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. Insurance in this segment will significantly grow in the years to come.

Author: Balachander Sekhar, CEO & Co-Founder, RenewBuy

Disclaimer: The views and opinions expressed in this article are solely those of the original author. These views and opinions do not represent those of The Indian Express Group or its employees.

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