Watts And Why: Unraveling The Mystery Of Why Electric Cars Are Expensive To Insure


The Indian vehicle industry is shifting significantly, with customers’ evolving tastes and preferences steering the demand towards electric vehicles (EVs). During the post-pandemic period, we witnessed a surge in interest in EVs, driven partly by rising fuel prices, making electric vehicles’ cost-effective and environmentally friendly nature more appealing.

Why Are Electric Cars Priced Higher?

Complex Components:

Understanding the cost dynamics of electric cars involves dissecting their essential components—battery pack, gearbox, and electric motor. Among these, the battery pack stands out as the most expensive element, primarily due to the utilisation of lithium-ion technology and rare earth materials. Larger cars, in particular, incur higher manufacturing costs, making the battery the main contributor to the overall high cost of electric vehicles.

Comparative Costs:

While electric vehicles present environmental and maintenance advantages over traditional fuel-powered cars, their insurance premiums tend to be higher. This stems from the higher initial cost of EVs, which makes them more susceptible to damage. Subsequent repair costs are comparatively elevated, contributing to increased insurance rates.

Expensive Spare Parts:

Despite requiring fewer parts overall, replacing or repairing an EV’s battery is expensive. This cost factor further contributes to the higher insurance premiums for electric vehicles.

Battery Replacement Costs:

The finite lifespan of an electric vehicle’s battery requires periodic replacements, which adds to the overall cost of ownership. The potential frequency of battery replacement directly influences electric car insurance premiums.

Limited Mechanic Expertise:

The relative novelty of electric vehicles in the market results in a need for more highly skilled mechanics for repairs and servicing. The scarcity of expertise inflates repair costs, subsequently impacting the insurance rates for electric vehicles.

Regulatory Impact On Electric Vehicle Insurance Premiums In India

Key Details Required For EV Insurance:

When applying for electric vehicle insurance, certain information about the EV is typically requested. These details include the EV’s model, year of manufacture, the insurance seeker’s contact information, and the usage purpose (business or pleasure). Additionally, inquiries may extend to previous insurance coverage, location, and other relevant details.

Tips For Affordable EV Vehicle Insurance:

Online Purchase Advantage:

Buying electric vehicle insurance online allows for easy policy comparison, and insurers often offer better rates to online customers. This is attributed to the perception that online policyholders pose a lower mortality risk, thus presenting an opportunity for lower premiums.

Leverage No Claim Bonus (NCB):

Accumulating a No Claim Bonus (NCB) by not filing claims during the policy term can lead to significant premium concessions. The higher the NCB, the more substantial the premium concessions insurance companies offer. Claims are subject to terms and conditions set forth under the motor insurance policy.

Anti-Theft Devices:

Investing in anti-theft devices for your electric vehicle can lower insurance premiums and enhance the end vehicle’s security against theft.

While the current cost of owning an electric vehicle may pose challenges, ongoing innovation in the automotive sector is expected to drive down these expenses in the long run.

The benefits of buying electric cars in India include cost savings on fuel, reduced environmental impact, and potential incentives such as lower insurance premiums and government subsidies.

Standard T&C Apply

All savings are provided by the insurer as per the IRDAI-approved insurance plan.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making any related decisions.

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.


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