The Growing Trend of Electric Vehicle Insurance in India
The adoption of electric vehicles (EVs) in India has led to a significant surge in EV insurance, with the share of insurance policies for EVs rising 16-fold over the past three years. According to data from Policybazaar, EV insurance policies have grown from 0.50% in FY23 to 8.2% by FY25, with projections indicating a peak of 14% by March 2025. Cities like Delhi-NCR, Bangalore, Pune, Chennai, and Mumbai have been at the forefront of this trend, contributing to 55% of all EV insurance policies.
Key Factors Driving EV Insurance Adoption
The surge in EV insurance is not limited to cars; two-wheeler EVs are also witnessing increased coverage. Policybazaar’s data shows that bookings for two-wheeler EVs have doubled annually, growing from 10,000 policies last year to 20,000 this year. Scooters dominate the insured electric two-wheelers, making up 98-99% of the market share. The trend is primarily driven by tier-1 cities, which account for 58% of all policies, highlighting that EV adoption remains largely an urban phenomenon.
Considerations When Purchasing EV Insurance
As the EV market continues to evolve, several key factors come into play when buying EV insurance:
- Unique Risks of EVs: Electric vehicles come with unique risks such as battery damage, fire incidents, and charging station issues. Insurers are now offering policies that specifically address these concerns, including coverage for battery damage and short circuits.
- Essential Add-ons: Add-ons like zero depreciation, roadside assistance, battery protection, and charger cover are in high demand for both EV cars and two-wheelers. These ensure comprehensive protection against common risks.
- Premium Costs: Despite higher risks, EV insurance premiums are comparable to those for traditional petrol vehicles. EV owners often enjoy a more favorable premium-to-IDV ratio.
- Government Incentives: Government incentives for EV buyers, such as tax benefits and subsidies under the FAME II scheme, have fueled EV growth and are likely to encourage more consumers to opt for EV insurance.
- Claims Process: EV insurance claims often involve issues like battery theft or fire incidents, with higher repair or replacement costs due to expensive components. Insurers are adapting their policies to cater to these unique needs.
“The accelerating adoption of EV insurance signals India’s shift toward sustainable mobility,” said Amit Chhabra, CBO at Policybazaar. As consumers recognize the need for tailored protection, insurers are innovating to meet the unique risks posed by EVs.
As the EV market continues to grow, understanding these factors will be crucial for consumers looking to purchase EV insurance that meets their needs.
