Auto Expo 2018: With the Modi government keen on making India a 100% electric vehicle nation by 2030, automakers too are shifting their focus to electric vehicles, a glimpse of which is being witnessed at the ongoing Auto Expo 2018 in Greater Noida. In fact, while dozens of electric cars are being showcased by auto majors here, many have even forged new partnerships in a bid to introduce electric cars over the next few years. Experts say that the demand for electric vehicles (EVs) is increasing day by day and it will continue to grow faster in the years to come, driven by stricter emission norms and growing consumer awareness. In fact, sales of electric vehicles are likely to witness high double-digit growth rates annually in India till 2020, as per a recent study.
However, apart from higher price, there are a few other things to keep in mind while going for an electric vehicle. One is insurance. Are you aware that you may have to shell out more for getting an electric vehicle insured? According to a recent report by the UK-based The Telegraph, “drivers swapping gas-guzzling cars for greener electric vehicles face paying nearly 50% higher insurance bills.” Although no such data is available in India, but industry sources say that here too getting an electric vehicle insured may be costlier as per global norms.
Is electric car insurance available in India?
The biggest question is: Is electric car insurance available in India? Insurers say as the market of electric vehicle is at a nascent stage in India, electric cars here are covered under the traditional car insurance policies that also cover petrol and diesel cars.
However, “the general problem that is faced while applying for an insurance policy is that there is no defined engine and cubic capacity of electric cars and the premium while applying for an insurance cover is basically based on the cubic capacity (CC) of the vehicle as per the guidelines laid by India Motor Tariff. Therefore, it is crucial to categorise cubic capacity of electric cars as per the guidelines to underwrite the premium,” says Tarun Mathur, Director, Policybazaar.com, adding that “for example, Mahindra’s Reva is categorised to be a 1000 cubic capacity car and hence its insurance cover is available in the market.”
Indian insurance companies, however, “are looking forward to provide a special insurance coverage for electric cars, as electric cars constitute a controller-powered electric motor, and rechargeable Lithium-ion batteries provide energy to the controller and are responsible for driving the car unlike traditional fuel-driven cars,” says Rajiv Kumar, MD & CEO, Universal Sompo General Insurance.
The differences will occur with the motor add-on covers like Engine Protector available with comprehensive motor insurance, which will vary, as the mechanism for vehicles powered by battery will be different from traditional fuel engines.
Will premium vary?
A basic motor insurance has two components — Own damage (damage to own vehicle) and Third party. For third party liability insurance, premium will be the same for both traditional and electric cars, whereas premium for own damage sections is based on the overall risk factors of the vehicle considering the cubic capacity, geographical location, accessories of the vehicle etc. “Considering these factors, insurance companies will charge the premium, which can vary if risk of controller-powered electric motor is lesser than traditional fuel engine,” says Kumar.
Industry sources, however, say that electric cars generally command higher premium because getting them repaired in case of damage is costlier than the traditional diesel or petrol cars.
Things to keep in mind while buying insurance cover
In India, the market for electric cars is still at a nascent stage. As the count of electric cars is very less, insurance companies are still to come up with specific coverage for electric cars, and thus standard coverages are being provided for electric vehicles across the market.
“Since there is no difference in a normal car policy and an electric car policy as per Motor vehicle regulations, one should look out for ‘Insured declared value’ ‘Type of Plan to be opted’, ‘Add-on features available’, ‘Cashless facilities’, and ‘Claim procedure of the company’ while getting the insurance cover,” informs Kumar.
As electric vehicles are costlier to buy as well as get repaired, an important thing to keep in mind is ‘Zero Depreciation Add-on’ cover.
With time your car’s value decreases, this is known as depreciation in the insurance industry. The percentage of depreciation is fixed by IRDAI for different type of parts. Now, when you file for a claim, the insurance company takes depreciation into account and reimburses the claim amount after deducting the depreciation cost. “Zero-Depreciation Add-on waives off the deductions in the claim amount made due to depreciation and makes your insurer reimburse the complete cost of repairing the damaged parts. Therefore, it is important to have this add-on in place while buying insurance for your electric car,” says Mathur.