Do you know why motor insurance premiums for electric vehicles are higher?

New Delhi: The Indian government has declared plans to transition to electric mobility by 2030, with the goal of having entirely electric vehicles (EVs) on the roads. With the growing popularity of EVs, more individuals are becoming aware of their environmental impact and choosing EVs over gasoline-powered vehicles.

While most EVs are powered by batteries, they can also be fueled by a fuel cell, which is a device that transforms chemical energy into electrical energy. The government has been encouraging the use of EVs through various incentives such as subsidies and tax breaks.

However, there is a large variation in motor insurance costs between electric and gasoline-powered automobiles. Let us go over it in depth.

Factors affecting motor insurance premiums

The cost of car insurance premiums is determined by various factors, including the type of vehicle, engine capacity, vehicle age, and insurer. Electric vehicle insurance is more expensive than gasoline-powered vehicle insurance for the following reasons:

How old is the vehicle?

Because electric vehicles are new to the Indian market, their motor insurance prices are higher than those for gasoline-powered vehicles. Fuel-powered vehicles are more mature in the market and have seen various advancements over time. As a result, insurance firms are more prepared to provide reduced premiums for automobiles that run on petrol.

How much does the vehicle cost?

Electric automobiles cost more than gasoline-powered vehicles. The cost of the vehicle plays a significant role in determining the cost of car insurance rates. Electric vehicles are more expensive due to the high cost of battery packs and other components. As a result, electric car insurance premiums are greater than those for gasoline-powered automobiles.

Battery capacity

The battery capacity of an electric car is a significant consideration when calculating the insurance premium. The greater the insurance cost, the larger the battery capacity, because larger batteries are more expensive to replace.

Driving range matters

The range of an electric vehicle is also an important consideration when calculating its insurance cost. Longer-range vehicles are more expensive to insure since they are more likely to be involved in accidents due to the higher distance traveled.

Charging time

When determining an electric vehicle's motor insurance premium, the time it takes to charge it is also considered. Vehicles that take a long time to charge are considered to be more dangerous and so have a higher insurance rate.

However, insurance firms are willing to give lower premiums for electric vehicles in some instances. Airbags and anti-lock braking systems are standard features on electric vehicles, which serve to lessen the likelihood of an accident. This makes them safer than gasoline-powered vehicles.

Furthermore, as part of its endeavor to encourage the usage of electric vehicles in India, the Insurance Regulatory and Development Authority of India (IRDAI) has set third-party liability insurance premium rates for electric vehicles at a 15% reduction compared to petrol/diesel engine vehicles.