While the government is offering a lot cost benefits to encourage sales of electric vehicles in India, its insurance is still on the higher side.
A growing number of people are now looking to own an electric vehicle (EV) as they have become more accessible, inexpensive, practical, and cheaper to drive. However, electric cars, despite becoming more affordable, are still more expensive to insure than petrol or diesel vehicles.
The government has waived off registration fees on electric vehicles but why is their insurance costlier?
To understand more about the costs of electric car insurance, continue reading.
Important aspects related to insurance costs
As a result of the low relative cost of electricity compared with gas or diesel, as well as incentives ranging from initial purchase grants to cheaper road tax and Congestion Charge exemptions, electric cars are typically considered as being economical to operate on the road. Electric car insurance or hybrid automobile insurance, according to experts, can be more expensive than insurance for a gasoline or diesel engine vehicle, although this is changing.
Electric vehicles that were first introduced to the market had a tough time obtaining affordable insurance. Insurance companies had no historical evidence on maintenance costs, so they were cautious in their predictions, boosting premiums or even refusing to insure electric cars. This resulted in higher pricing and less insurance options for EV owners.
But now electric cars becoming increasingly popular and repair costs becoming well-documented, more insurers have entered the market, resulting in lower rates. Electric cars are also a less common target for theft because of their restricted range and charging them is time-consuming and complex, and the infrastructure for doing so is not widely available.
Is insurance more expensive for EV owners?
Due to no emissions, EVs are deemed environmentally friendly and cost-effective to operate. You get more driving range for your money with these vehicles than you would with traditional internal combustion engine (ICE) vehicles. The insurance costs for these vehicles, on the other hand, are typically higher than those for gasoline or diesel vehicles. One reason is that electric vehicles are more expensive, more susceptible to damage, and require more expensive repairs.
But insurance premiums are guaranteed to reduce when repair costs and ownership costs decline. Companies are now offering reasonable insurance policies for electric vehicles as well.
Reasons for the high cost of insurance premiums
Electric car insurance premiums are affected by a number of things. EV insurance premiums are calculated using a variety of factors.
Electric vehicles are more expensive than gasoline-powered vehicles
Electric vehicles are more expensive than gasoline or diesel-powered vehicles, which is one of the major reasons why their insurance premiums are higher. In addition to high-capacity batteries and sophisticated automotive parts, EVs are equipped with cutting-edge technology. Accordingly, the Insurance Premium rises in direct proportion to a car's price.
There are a lot of costs associated with owning an electric vehicle
Despite the fact that electric vehicles have fewer moving components than petrol or diesel-powered vehicles, the lithium-ion battery is the most expensive component. Over 50% of the car's price is accounted for by the battery pack. Insurers charge more for battery repairs or replacements since they are pricey. The cost of these batteries is a major concern for automakers. It is projected that insurance premiums would fall as battery costs decline.
Battery replacements for electric cars are very common
After a certain period of time, electric car batteries begin to degrade or cease functioning. It's possible that you'll have to keep replacing the batteries after some time. Because lithium-ion battery prices are high, replacement expenses are high, and insurance rates are high as a consequence. Lower premiums can get lower by reducing the number of battery replacement cycles.
Electric vehicle mechanics are in shorter supply
As a result of the pricey and extremely complicated car parts, electric cars require a high level of maintenance. To service or repair an electric car, mechanics must be highly skilled. A relative shortage of qualified auto mechanics exists at the present time. Due to the high cost of hiring a specialized technician, the labor cost for repair or replacement may be greater.
The Insurance Regulatory and Development Authority of India sets the premium for Third-Party Car Insurance. Because electric vehicles are environmentally benign, IRDAI has recently reduced third-party car insurance prices for them by 15 percent compared to petrol or diesel-powered private cars.