In the wake of global warming and climate change, there are several reasons why owning an electric car makes sense. Besides environmental factors, rising fuel costs, and high pollution levels are pushing people to opt for these zero-emission vehicles. Unlike traditional combustion engine vehicles, electric cars are battery-operated and are environment-friendly.
However, like all good things, even electric vehicles (EVs) come at a price. Compared to petrol and diesel-run vehicles, repairing or replacing the damaged parts of an EV is costlier. It means if you do not invest in a robust car insurance policy, you may have to bear the brunt in the face of a mishap. It also means that a car insurance policy for EVs comes at a higher cost compared to that for traditional engine cars.
Today, we will look at the various factors that affect the cost of car insurance premiums for EVs.
What makes EV insurance costlier than standard motor insurance?
EVs are a new entrant to the Indian automobile market. Due to this reason, the IRDAI and insurance companies are still working on developing insurance plans and fixing the cost of insuring electric vehicles. Here are some reasons that make insuring EVs expensive:
- High costs of electric vehicles
Compared to standard petrol and diesel cars, electric cars are more expensive. This pushes up their Insurance Declared Value (IDV). Now, as you know, a high IDV directly translates to a higher motor insurance premium. However, despite its higher premium, you still save more money running an EV as charging it is cheaper than buying fuel to travel the same distance.
- Expensive repair costs
EVs are equipped with expensive parts such as high-capacity batteries. So, you have to pay more for their repairs. EVs contain a lithium-ion battery that costs more than half the total cost of your vehicle. Thus, repairing or replacing the battery can burn a hole in your pocket. Likewise, the replacement or repair of other parts of your EV is expensive compared to standard vehicles. For all these reasons, insurance companies charge a high premium amount for insuring an electric vehicle.
- Not many qualified technicians
EVs come with various complex car parts that require specialised servicing. It means you need highly-skilled mechanics specialising in repairing EVs for any repair work. Such skillsets and labour are hard to find compared to traditional mechanics. You cannot take your EV to just any garage for repairs. Moreover, EV mechanics charge more for repairing or replacing EV parts. Since insurance companies provide coverage for vehicle damage due to natural calamities, fires, and accidents, they charge higher insurance premiums for insuring your EV.
Ways to reduce your electric car insurance premium
Having to pay a higher premium cost for an electric car is inevitable. The higher the risk for insurance companies, the more will be the premium cost. However, you can reduce the cost by keeping a few things in mind. Here’s what you can do:
- Purchase insurance online
This is a good way to find a low-cost insurance policy. Start by shortlisting some good car insurance plans and comparing their add-ons, inclusions, exclusions, and services. You are sure to get a third-party car insurance plan that fits your budget. For exhaustive coverage, opt for comprehensive insurance with relevant add-ons.
- Install security devices
You can reduce your car insurance premium by installing security devices in your EV. These include safety locks and anti-theft devices. Remember, insurers charge lower premiums for vehicles fitted with anti-theft devices. Moreover, with such equipment, you can enhance the safety of your EV and reduce the chances of car theft.
- Opt for voluntary deductibles
A voluntary deductible is a sum that policyholders have to pay during insurance claims. By opting for a voluntary deductible, you can reduce your car insurance policy premium amount.
Even if you are a new car owner and drive responsibly, you can lower your chances of making claims. That way, by purchasing car insurance with a voluntary deductible, you can pay less for your insurance premium.
- Redeem the No Claim Bonus
As you may know, insurers offer a No Claim Bonus (NCB) to policyholders for every claim-free year. NCB is offered as a lower premium or higher sum assured at the time of policy renewal. Also, you can lower your chances of insurance claims by being a responsible car driver and maintaining your EV. You can then be eligible for the No Claim Bonus that keeps on accumulating every consecutive claim-free year. By redeeming your No Claim Bonus, you can reduce your EV premiums.
With the increasing popularity of EVs, the prices of electric cars are expected to come down. Technological advancements will help in making EVs less expensive to purchase and maintain. Once we get there, the cost of insurance premiums for EVs will come down naturally. Until then, invest in a robust policy and keep your EV safe.