EV insurance claims cost 14% more, battery cover adoption hits 70%: Report | Personal Finance
Insurance coverage for repairing electric vehicles (EVs) cost 14 per cent more on average than those for comparable petrol and diesel cars, according to data from Policybazaar.
The average claim cost for an electric car stood at Rs 41,543, compared with Rs 36,185 for an internal combustion engine (ICE) car. The comparison covers vehicles in their first three years of ownership, priced between Rs 10 lakh and Rs 15 lakh, excluding large-loss claims.
The findings highlight why EV owners need to look beyond the premium when buying motor insurance. Expensive battery systems, complex electronics and limited repair infrastructure can increase the cost of repairing an electric car, making the choice of add-on covers particularly important.
The data also point to seasonal and geographical differences in EV insurance claims. Monsoon-related claims are more expensive, while Tier-II cities report a higher claim frequency than Tier-I cities.
Why are electric car insurance claims more expensive?
The battery is one of the most expensive components of an electric car. Depending on the model, replacing it can cost as much as 40-50 per cent of the vehicle’s total price, according to Policybazaar’s data.
However, repair costs are not limited to the battery. Damage to battery cooling systems, electronic components and infotainment systems can also raise the bill.
For an EV owner, this creates a financial risk if the insurance policy does not adequately cover the damage. A comprehensive motor insurance policy generally covers accidental damage to the insured vehicle, subject to its terms and exclusions. However, the protection available for battery-related damage depends on the policy and the add-ons selected.
Owners should therefore check whether their policy covers relevant battery damage, including water ingress, and understand the exclusions and claim conditions before purchasing it.
Battery protection cover gains popularity
Awareness of the potential cost of EV repairs appears to be influencing insurance choices. The share of EV owners opting for battery protection cover rose from 51 per cent to 70 per cent over six months, according to Policybazaar.
The data also show that around 80 per cent of EV owners opt for at least two major add-on covers. These include battery protection, zero depreciation, roadside assistance (RSA) and consumables cover. The corresponding figures are 75 per cent for petrol cars and 77 per cent for diesel cars.
Each add-on serves a different purpose.
Battery protection: May cover specified battery-related damage, including water ingress or electrical issues, depending on the policy wording.
Zero depreciation: Reduces or removes depreciation deductions on eligible replaced parts, subject to policy conditions.
Roadside assistance: Can provide services such as towing and emergency support if the vehicle breaks down.
Consumables cover: May pay for eligible items such as nuts, bolts, lubricants and other consumables used during repairs.
These covers are not interchangeable, and their benefits vary between insurers. EV owners should compare the additional premium with the protection offered rather than buying add-ons solely because they are popular.
Monsoon raises the cost of EV claims
The rainy season is another period when EV owners need to review their insurance protection.
Policybazaar’s data show that the average EV claim cost rises to nearly Rs 65,000 during the monsoon, compared with Rs 52,000 during the rest of the year. This represents an increase of about 25 per cent.
Flooding, waterlogging and adverse weather can increase the risk of vehicle damage. Battery-related repairs can be particularly expensive, depending on the nature of the damage and the policy’s terms.
Owners should check how their policy treats water-related damage and whether battery protection is included. They should also understand the exclusions, as not every instance of water damage or mechanical failure will necessarily qualify for a claim.
Tier-II cities report more claims than Tier-I cities
The geographical distribution of claims also offers an indication of the risks faced by EV owners in different parts of the country.
East India recorded 41 claims per 100 insured EVs, the highest among the regions covered in the data. North India followed with 34, West India with 32, the Northeast with 30 and South India with 27.
By city category, Tier-II cities recorded 33 claims per 100 insured EVs, compared with 30 in Tier-I cities and 27 in Tier-III cities.
The figures suggest that higher claim frequency is not limited to major metropolitan centres. However, the data do not establish why particular regions or city categories report more claims. Road conditions, weather patterns and vehicle usage could be among the contributing factors.
The frequency figures also measure the number of claims relative to insured EVs, not the average cost of each claim. A higher claim frequency does not necessarily mean that every EV owner in a particular city faces higher repair bills.
SUVs record the highest claim frequency
Among electric car body types, SUVs recorded 31 claims per 100 insured vehicles, followed by hatchbacks at 28 and sedans at 26.
Policybazaar suggests that driving patterns and road conditions could contribute to the differences. SUVs may be used more frequently for longer journeys and highway driving, while hatchbacks may see greater use in congested urban areas.
These are possible explanations rather than established causes, and the figures do not show that every SUV is riskier to insure than every hatchback or sedan.
Paras Pasricha, head of motor insurance at Policybazaar, said EV owners should consider their vehicle, location and usage when choosing insurance, rather than focusing only on the premium.
For buyers, the practical lesson is to compare the coverage offered, especially for battery-related damage, alongside the premium and policy exclusions. A cheaper policy may not necessarily offer the protection needed when repairs involve high-value EV components.
