The Indian government has announced plans to transition to electric mobility with the aim of having only electric vehicles (EVs) on the roads by 2030. With the increasing popularity of EVs, more people are becoming conscious of their environmental impact and are opting for EVs over fuel-based vehicles.
While EVs are traditionally powered by batteries, they can also be powered by a fuel cell, which is a type of device that converts chemical energy into electrical energy.
The government has been pushing for the adoption of EVs through various incentives such as subsidies and tax exemptions.
However, there is also a significant difference in the motor insurance premiums for electric vehicles and those for fuel-based vehicles. Let us discuss it in detail.
What is motor insurance?
Motor insurance is an insurance policy that covers the cost of damage or accidents caused to vehicles. It helps to protect the owner of the vehicle from any financial losses due to an accident or any other damage caused to the vehicle.
It can be purchased from an insurance company or a broker, and the cost of the policy depends on the type of vehicle and the type of coverage required. Having motor insurance is extremely important as it can help to protect vehicle owners and drivers from any unexpected financial losses.
What are the factors affecting motor insurance premiums?
The cost of motor insurance premiums depends on several factors, such as the type of vehicle, engine capacity, age of the vehicle, and the insurer. The cost of motor insurance for electric vehicles is higher than that for fuel-based vehicles due to the following reasons:
Age of the vehicle
Electric vehicles are relatively new in the Indian market and hence, the motor insurance premiums for electric vehicles are higher than fuel-based vehicles. Fuel-based vehicles are more mature in the market and have undergone several developments with time. As a result, insurance companies are more willing to offer lower premiums for fuel-based vehicles.
Price of the vehicle
Electric vehicles are more expensive than fuel-based vehicles. The cost of the vehicle is a major factor in determining the cost of motor insurance premiums. The cost of electric vehicles is higher due to the expensive battery packs and other components. As a result, the motor insurance premiums for electric vehicles are higher than those for fuel-based vehicles.
The battery capacity of an electric vehicle is an important factor when it comes to determining the insurance premium. The larger the battery capacity, the higher the insurance premium, as larger batteries are more expensive to replace.
The range of an electric vehicle is also an important factor in determining its insurance premium. Vehicles with a longer range are more expensive to insure, as they are more likely to be involved in accidents due to the increased distance covered.
The time taken to charge an electric vehicle is also taken into account when calculating its motor insurance premium. Vehicles that take a long time to charge are seen at higher risk and therefore have a higher insurance premium.
However, in some cases, insurance companies are willing to offer lower premiums for electric vehicles. The electric vehicles come with advanced safety features, such as airbags and anti-lock braking systems, which help to reduce the chances of accidents. This makes them safer than fuel-based vehicles.
Additionally, the Insurance Regulatory and Development Authority of India (IRDAI) has set the third-party liability insurance premium rates for electric vehicles at a 15% discount compared to petrol/diesel engine vehicles, as part of their effort to encourage the use of electric vehicles in India.