Buying An EV? Why Your Standard Motor Insurance May Fall Short

Buying an electric vehicle can help bring down fuel expenses, but owners need to think about what happens when something goes wrong. A damaged battery, a short circuit or a problem with the charging system can lead to a hefty repair bill. And unlike conventional cars, electric vehicles (EVs) come with components that require specialised handling.

“The battery is a major reason for this. It can account for as much as 40 per cent of an EV's cost, making battery damage particularly expensive. Repairs can also be more complicated because spare parts and trained technicians may not be easily available everywhere,” says Aditya Kumar, Head - Motor Underwriting, Digit Insurance.

This is why EV owners should look closely at their insurance policy instead of assuming that a regular motor cover will take care of every eventuality.

A comprehensive motor insurance policy remains the starting point. It covers damage to the vehicle, subject to policy terms, and provides protection against risks such as accidents, theft, fire and floods. Third-party cover is also part of the package. But EV owners may need additional protection for the battery, electrical systems and charging equipment.

For example, some insurers offer an EV Shield add-on that covers the cost of repairing or replacing the battery, hybrid system and electrical panel in specified situations involving water ingress, short circuits or accidents. The cover also extends to short circuits while the vehicle is plugged in for charging. Damage to the charging cable and charging point caused by animal attacks is covered as well, subject to the policy conditions.

What If The Battery Runs Out On The Road?

Unlike a petrol or diesel car, an EV cannot simply be refuelled at the next pump if it runs out of energy. Finding a charging station may take time, especially on an unfamiliar route.

“A roadside assistance add-on can help in such situations. Under EV roadside assistance offerings, a mobile generator can be sent to charge a vehicle whose battery has run flat. Charging is provided for up to 30 minutes or until the battery reaches 30 per cent, whichever comes first. If this is not possible, the vehicle can be towed for up to 50 km to the nearest charging station, workshop, home or office,” says Kumar.

For someone who travels frequently, such assistance could prove useful when a charging stop is not within easy reach.

Other Odd-Ons Are Worth Considering Too

EV owners need not overlook the add-ons available to conventional car owners. Zero depreciation cover can reduce depreciation-related deductions on eligible parts when a claim is settled. Return-to-invoice cover can help bridge the gap between the vehicle's insured value and its invoice value in specified cases of theft or total loss. Consumables and tyre protection can also help with expenses that may otherwise come out of the owner's pocket.

Those who use their vehicles mainly for short commutes and do not drive many kilometres could look at a Pay As You Drive add-on, where available. The premium benefit will depend on the policy's terms and the vehicle's usage.

“The insured declared value (IDV) deserves attention as well. It is the value used to calculate compensation in cases such as total loss or theft, subject to the policy. Choosing an unrealistically low IDV to save on the premium could leave the owner with a shortfall when a claim arises,” informs Kumar.

The Fine Print Matters

Even an EV-specific add-on has its limits. Owners should check the exclusions and conditions before buying the policy, particularly those relating to battery maintenance and repairs.

Under the EV Shield add-on, a claim may be rejected in specified circumstances, such as when the vehicle has not been charged according to the manufacturer's guidelines, the battery's state of health falls below the manufacturer's prescribed threshold, or repairs are carried out at a non-OEM service centre.

“Repairs undertaken without the insurer's prior approval may also be excluded. Wear and tear, damage covered by the manufacturer's warranty and damage arising from a vehicle recall are generally not covered, subject to the policy wording,” says Kumar.

Flooding needs special care. If an EV has been submerged in water, owners should resist the temptation to switch it on to check whether it still works. Doing so could cause further damage and may affect the insurer's assessment of the claim. The safer course is to have the vehicle inspected by qualified professionals.

An EV can reduce day-to-day running expenses, but an unexpected repair can quickly eat into those savings. Choosing insurance, therefore, calls for more than comparing premiums. Owners need to check what their basic policy covers, identify the gaps and add protection where it makes sense. Just as importantly, they should understand the exclusions before they need to make a claim.