Buying An Electric Vehicle? Know All The Insurance Rules First
India has witnessed significant strides in the adoption of electric vehicles (EVs) driven by initiatives like the National Electric Mobility Policy 2025 and the Government's vision of hundred percent electric mobility by 2030. Despite promising developments, the range anxiety, high upfront cost, expensive battery replacement, accessibility of charging points, and the limited lifespan of batteries deter the buying behavior. EV insurance policies today go beyond the conventional scope and present essential considerations for individuals who want to make a shift to EVs.
Premiums: Understanding the Cost Challenge
Electric vehicles typically incur higher insurance rates in comparison to petrol or diesel cars. This is attributed to the higher initial cost of EVs, their susceptibility to damage, and the higher expenses associated with repairs. However, as advancements in technology drive down manufacturing costs for electric vehicles and maintenance becomes more affordable, a shift is expected. With a diminishing trend in repair costs and an overall reduction in the cost of ownership, it is anticipated that insurance rates for electric vehicles will also decrease.
Ensuring Battery Protection for Peace of Mind
The cost of the battery is a significant component of the overall electric vehicle (EV) expense, underscoring the importance of safeguarding it to instill confidence in consumers. EV-specific insurance policies play a pivotal role in ensuring the longevity of the battery, offering coverage for a specified number of years and ensuring continued optimal performance. Also, comprehensive EV insurance plans extend their protection beyond the battery, covering other advanced gadgets and components inherent in electric vehicles. This broader coverage becomes crucial, considering the sophisticated nature of the technology integrated into EVs.
Easing the Price Burden
By offering coverage for both the batteries and vehicle performance, these insurance policies present an opportunity for financial institutions, such as banks, to extend the duration of loan terms and subsequently decrease the monthly installment amounts. This bears substantial significance, particularly in the context of India, where electric vehicles (EVs) are generally retailed at premium prices. The ability to stretch loan terms provides a practical solution to mitigate the financial burden on consumers, making EV ownership more accessible and attractive.
In conclusion, India's mission toward electric vehicle (EV) adoption signals a shift to sustainable mobility. Despite concerns, specialised EV insurance enhances confidence and offers financial benefits. Positioned at the forefront of the global EV revolution, India needs to integrate robust insurance frameworks to support affordability and confidence in a greener automotive future.
These policies not only offer financial protection but also instill peace of mind in consumers, thereby contributing to the continued growth of EV adoption in India.
The article has been authored by Animesh Das, Chief Underwriting Officer of ACKO.
