The EV Insurance Conundrum: Why Standard Policies Won’t Cut It
As the world transitions to electric vehicles (EVs), the need for specialized insurance policies has become increasingly important. Unlike traditional internal combustion engine (ICE) vehicles, EVs require a unique set of coverages to protect their expensive batteries and other critical components. In this article, we’ll delve into the world of EV insurance and explore why standard policies won’t suffice.
The Battery: The Most Critical Component of an EV
The battery is the lifeblood of an EV, accounting for nearly 40-60% of the vehicle’s value. As such, it’s essential to have a policy that specifically covers the battery, including the electric panel, charging equipment, and wall chargers. Most insurance policies don’t cover batteries as standard, and the cover for batteries can only be bought as an ‘add-on’. This is where specialized policies like ‘EV Shield’ come into play, offering battery protection, electric motor cover, charging equipment cover, and protection against water ingress, short circuits, electrical surges, or accidental damage.
IDV: The Insured Declared Value
The IDV (Insured Declared Value) is higher for EVs compared to equivalent petrol vehicles, primarily due to the battery’s significant value. It’s crucial to confirm battery coverage rather than assuming standard comprehensive cover treats it like any other part. “EV owners need to specifically confirm battery coverage rather than assume standard comprehensive cover,” said Shilpa Arora, Co-founder and COO of Insurance Samadhan. “The IDV for EVs should equal the on-road price minus standard depreciation (as per policy). For EVs, the insured should ensure that the battery replacement cost sits inside the IDV envelope.”
Zero-Depreciation Cover: A Must-Have
Without zero-depreciation cover, the insurer can apply up to 50% depreciation on the battery specifically, which is a significant amount given the battery’s share of vehicle value. “Zero depreciation ensures you won’t have to pay out-of-pocket for depreciation on replaced parts during repairs,” said Aditya Kumar, Head, Motor Underwriting, Digit Insurance. This cover is non-negotiable, and EV owners should opt for it to avoid any financial shocks.
Other Add-Ons to Consider
In addition to EV Shield and zero-depreciation cover, EV owners should also consider other add-ons like ‘Roadside Assistance’ that offers emergency battery-swapping or mobile charging units if they’re stranded with a fully depleted battery. Other add-ons to consider include ‘Return to Invoice’, which guarantees a payout of the vehicle’s full original invoice value in the event of total loss or theft, and ‘Consumables and Tyre Protect’, which provides coverage for smaller replacement costs such as coolants and brake fluids while safeguarding against damage to tyres.
Damage to Charging Equipment: A Potential Risk
Damage to charging equipment from power surges, electrical faults, theft, or accidental damage isn’t always included in standard policies. Insurers offer separate ‘add-ons’ extending cover to home charging infrastructure. As such, EV owners should opt for comprehensive policies that cover these risks.
Don’t Do Unauthorized Repairs
Beyond standard exclusions like drunk-driving, insurers can reject battery claims if you fail to follow OEM (Original Equipment Manufacturer) charging and maintenance guidelines, or if you carry out unauthorised third-party repairs. “EV repair costs are slightly higher than those for ICE vehicles,” said Kumar. “The EV repair ecosystem in India is still developing, leading to a scarcity of specialised technicians and costly replacement technology.”
Monsoon-Related Damage: What’s Covered
During the monsoon season, EV owners often worry about waterlogging and flooding. A comprehensive motor insurance generally covers flooding, inundation, landslides, hailstorms, fallen trees, and rain-related accidents, and may pay for damaged parts, repainting, and repairs after floodwater enters the vehicle. ‘Own Damage’ (OD) cover under a comprehensive (or standalone OD) policy pays for damage to your own vehicle from accident, fire, flood, or theft.
Common Mistakes to Avoid
Exceeding the wading depth/riding into deep water can result in a rejected claim. For instance, if your vehicle stopped mid-road after you rode through 1-foot water and the depth allowed in your policy is only 150 mm, then your claim will be rejected. “Know your vehicle’s wading limit and never ride through stagnant deep water,” Arora stated. Restarting a submerged/stalled vehicle can also cause a hydrostatic lock, which is usually excluded from standard policies because insurers view it as consequential loss rather than a direct accidental event.
In conclusion, owning an EV requires a specialized insurance policy that covers the unique risks associated with these vehicles. By understanding the importance of EV Shield, zero-depreciation cover, and other add-ons, EV owners can ensure they’re properly protected against financial shocks.