How motor insurance premium varies for electric vehicles vs fuel-based vehicles | The Financial Express

How motor insurance premium varies for electric vehicles vs fuel-based vehicles

For fuel-based vehicles the engine size determines premium. For EVs, kilowatts (kW) decide premium

insurance, motor iinsurance
Third-party insurance is a lawful mandate that applies to EVs and fuel-based vehicles alike. (IE)

By Ashwini Dubey

Electric vehicles (EVs) are a determining force of green mobility. A recent study by the Council on Energy, Environment and Water indicated that Delhi has the highest rate of EV adoption at 8.3% (between April 2021 and September 2022). This appeal isn’t limited to metro cities; the adoption is seeping into smaller cities as well.

But EV embracement is not without its blind spots and doubts. A common question is whether motor insurance differs for an EV as compared to a fuel-based vehicle? Since motor insurance is a mandate by law, EVs are no exception to the rule and it is critical to know about insurance terms. Here’s a lowdown on how your premium changes for both kinds of vehicles.

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Does the choice of engine impact your premium?

Yes. The make of the engine has a direct impact on premium. Fuel-based cars with a higher cubic capacity will have higher third-party rates as compared to those with a lower capacity. But EVs don’t have an internal combustion engine. They have an electric motor functioning as the engine. For this reason, the same classification of cubic capacity does not hold relevance. So, how is the premium for EVs determined? Instead of cc, it’s kW or kilowatts that are the deciding factor for EV premium.

Is it costlier to insure your EV?

The answer is not so straightforward. Let’s break this down.

Discounted premium: Third-party insurance is a lawful mandate that applies to EVs and fuel-based vehicles alike. The only difference is that in a bid to promote green mobility through EVs, the IRDAI has provided 15% discount on premium for motor insurance on EVs. In reality, it translates to around Rs 1,700 third-party premium for an EV less than 30 kW and around Rs 6,700 for EVs above 65 kW, while the cost comes to Rs 2,700 for EVs with 30-65 kW.

If we talk about fuel-based cars, here’s how the figures differ. Costlier cars like SUVs and luxury sedans with a cubic capacity above 1,499 cc have a third-party premium of Rs 7,897 plus tax, while the premium for hatchbacks with engine capacity lower than 1,000 cc is Rs 2,100 plus taxes.

Higher maintenance: If we talk about comprehensive insurance coverage, EVs are sophisticated.

For instance, the most crucial part of an EV is the battery that has an expiry date and will need replacement. Also, insurers have a clearer idea of risk assessment when it comes to fuel-based cars as that data is extensively available. On the other hand, EVs are a new concept and risk-profiling has a long way to go. As the industry makes more progress, premiums are likely to be balanced out and come down in the future.

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How to double up your EV’s protection?

EVs are complex piece of machinery. You can’t get them repaired in every other neighbourhood garage as it takes an expert technician to take care of the damages, especially in the interior parts of the vehicle. In addition to a comprehensive cover, one must opt for add-ons like roadside assistance cover to prevent any untoward situation. Similarly, given the nature of the machinery, zero depreciation cover is of great utility to the policyholder. One should go for a battery protection add-on that will cater to your EV in case of battery damage. These covers will top up your insurance and add an extra layer of preventive protection to your EV. You can save on premium further by comparing different policies online and even closing the purchase online.

The author is head, Motor Insurance Renewals,

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First published on: 20-03-2023 at 01:40 IST
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