Insurance premiums on two-wheeler electric vehicles (EVs) may rise as insurers reassess risk based on recent fires and malfunctions. While deaths and injuries due to accidents will be covered under existing insurance plans, EV makers may have to compensate for damage or loss of life due to manufacturing defects, the Economic Times reported.
There have been multiple two-wheeler fires said to involve batteries recently, with some even resulting in loss of life. This prompted roads, transport and highways minister Nitin Gadkari to caution manufacturers, saying the government will order a recall of faulty vehicles and impose penalties on any company found to be negligent in its processes.
“We are monitoring the claims experience for electric vehicles, including the instances of fire that are coming up,” said Adarsh Agarwal, chief distribution officer at Digit Insurance. If more such events take place, the company could incorporate such risk while pricing premiums, he said.
ICICI Lombard is also monitoring the situation.
“A risk-based approach to pricing may be taken as and when the facts of incidents and the probable controls around them are clear," said Sanjay Datta, chief, underwriting and claims. EV insurance premiums haven't been affected by the recent incidents,” he said.
Okinawa announced a recall of 3,215 units of its Praise Pro electric scooter last month "to fix any issue related to batteries." Ola said it will recall 1,441 vehicles that will "go through thorough diagnostics across all battery systems, thermal systems as well as safety systems." Pure EV is recalling 2,000 units of its ETrance+ and EPluto 7G models.
According to insurance professionals, the current plans for insuring electric vehicles don't cover loss or injury due to manufacturing defects.
“If the accident occurs due to a manufacturing defect, then the direct or subrogated liability would fall on the manufacturer for payment of the claim,” said Datta.
Personal Accident Cover
Personal accident cover is compulsory for the 'owner-driver' and is mandated by law, he said. "Cover is provided to the owner-driver whilst driving the vehicle including mounting and dismounting from or travelling in the insured vehicle as a co-driver,” Datta added.
According to Digit’s Agarwal, personal accident cover is not included in the standard EV insurance policy.
“If the policyholder wishes, he may opt for a personal accident cover as a rider at a small added cost,” he said. Further, if the driver dies due to the EV catching fire while they are riding the vehicle, the Compulsory Personal Accident (CPA) cover gets triggered if opted for by the policyholder or rider, he said.