EV Insurance Uptake Grows 16 Times In 3 Years: These Key Add-Ons Are In Demand

With the increasing adoption of electric vehicles (EVs) in India, a change is taking place in the auto insurance industry as well. In the last three years more people have chosen to insure their EVs, and the numbers reflect just how quickly this shift is taking place.

According to data from Policybazaar, an online insurance marketplace, EV insurance purchases have grown around 16 times since 2022. The trend is more visible in cities like Delhi, Bangalore, and Pune while more EV owners are opting for extra coverage to protect against battery theft, fire and high repair costs.

Let’s take a closer look at how EV insurance is changing the face motor insurance uptake among vehicle owners:

More EVs on the Road, More Insurance Policies in Hand

Three years ago, hardly anyone was buying insurance for their electric cars. Now, the numbers tell a different story:

• In 2023, just 0.50 per cent of car insurance policies were for EVs.

• In 2024, that number rose to 3.50 per cent.

• By 2025, it's already 8.2 per cent, and the numbers are expected to hit 14 per cent by March 2025.

Two-wheeler EVs are also catching up fast. The number of insured electric two-wheelers has doubled in just one year. Last year, 10,000 policies were bought. This year, it's already 20,000, and nearly all of them are for electric scooters.

Where Are People Buying the Most EV Insurance?

Not surprisingly, India’s biggest cities are leading the charge in EV adoption. The majority of insurance policies for electric vehicles are being bought in these urban hotspots:

• Delhi-NCR: 18.3 per cent

• Bangalore: 16.0 per cent

• Pune: 7.6 per cent

• Chennai: 6.7 per cent

• Mumbai-Thane: 6.4 per cent

Together, Tier 1 cities make up 58 per cent of all EV insurance policies, while Tier 2 cities contribute 30 per cent, and Tier 3 towns add up to 12 per cent.

What Extra Coverage Are EV Owners Choosing?

EVs have different risks compared to petrol or diesel cars, so owners are opting for special add-ons when buying insurance. Some of the most popular ones include:

• For EV Cars: Zero Depreciation, Roadside Assistance, Battery Cover, Key and Lock Replacement, Consumables, Invoice Price Protection, and Tyre Protection.

• For EV Two-Wheelers: When it comes to two-wheeler insurance, people are increasingly opting for coverages like Battery Protectors (including coverage for theft and damage), CHarger Cover, Zero Depreciation, Roadside Assistance, and Return to Invoice.

When it comes to EVs, battery-related coverage has become the must-have, as EV batteries make up almost 50 to 60 per cent of the total cost of the vehicle.

What Are The Most Common Reasons For Claim?

Insurance companies are noticing that claims for EVs are becoming frequent, and more expensive than those for regular fuel-powered vehicles. This because of:

• Battery Theft: EV batteries are costly and therefore they also become the first target for thieves. This in turn tends to drive up the claims for EV insurance.

• Fire Incidents: Electric vehicles are also prone to catching fire due as a result of overheating while charging. This also significantly leads to expensive total-loss claims.

• High Repair Costs: Additionally, some EV parts such as their batteries are not only pricey but their repairing costs also tend to be higher. Therefore, replacing or fixing them costs much more than repairing traditional cars or bikes.

What Is Next for EV Insurance?

The EV market is growing in India and so is the demand for insurance that caters to the unique risks that come with it. Says Amit Chhabra, CBO of General Insurance at Policybazaar, “With EV insurance share growing nearly 16-fold in just three years, consumers are not only adopting electric vehicles but also recognising the need for tailored protection.”

More and more charging stations are coming up across close-nit areas as the government is pushing for EV adoption with incentives that cater to this sector. When more people invest in EVs, making sure they have the right insurance coverage will be just as important as choosing the vehicle itself.

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