Why is electric car insurance expensive?
As mentioned, premiums for electric car insurance policies are higher than conventional car insurance plans. Below are the reasons behind the high costs associated with electric car insurance:
● Electric cars are expensive to buy
Electric cars are expensive to purchase compared to regular cars, and even the cheapest electric cars in India cost more than Rs. 10 lakhs. Due to the high value of electric cars, their Insured Declared Value (IDV) increases, resulting in increased car insurance premiums
.
Although the up-front cost of buying an electric car is higher, it makes sense to invest in it as it will enable you to save on fuel costs and maintenance charges over the years.
● Electric car parts are expensive
The primary reason for electric cars being expensive is that their various components are costly. The most expensive of them is the car’s battery, which accounts for more than 60% of its value. Replacing or repairing these parts can be a costly affair, which is one of the reasons behind the high pricing of electric car insurance.
Car manufacturers are striving hard to reduce the cost of these parts. If they can reduce the costs of electric car parts, their insurance premium may also decline.
● Batteries have to be replaced
Electric cars draw their power from high-capacity batteries, and these batteries come with an expiry date, which means that they have to be replaced after a certain period. As mentioned, these batteries are very costly, and replacing them may run into a few lakhs of rupees. Since comprehensive electric car insurance policies cover these costs, their premiums are on the higher side.
However, if you want to reduce your electric car insurance cost, you can opt out of the battery replacement cover. But remember that you will run the risk of paying from your pocket in case your battery requires replacement in the future.
● High labour costs
Electric cars require a high level of maintenance because of their costly and complex parts. Not all mechanics can service or repair an electric vehicle; it requires specific knowledge and skills. Currently, the number of mechanics skilled in repairing electric cars is lower in India than the traditional car mechanics.
All these factors result in high labour costs for the replacement or repair of electric car parts, and this is another reason why electric car insurance plans are expensive.
● Supply chain and infrastructure-related problems
Not too many people currently own electric cars in India, due to which there are several supply-chain and infrastructure-related problems. Companies are constrained in terms of getting raw materials required for the manufacturing of EVs. These factors contribute to the high pricing of electric cars, and subsequently, their insurance plans also become expensive.
However, as more people start buying electric cars in India, EV manufacturers will invest in improving their infrastructure and supply chain. Hence, the cost of car insurance for electric cars is expected to decline in the future.
The Final Word
Although the cost of buying electric car insurance is on the higher side, there are many advantages to purchasing an electric car. Some of them include low maintenance charges, freedom from fuel price hikes, and reduced pollution levels.
Moreover, you can get EV car insurance discounts by buying an online policy and installing anti-theft devices in your car. ICICI Lombard provides comprehensive car insurance for electric cars at competitive rates.