Insuring Electrical Vehicles

by SMCIB on Saturday, 10 June 2023

Insuring Electrical Vehicles

Electric vehicles are the talk of the town these days, and demand for them is increasing gradually in India. According to an article by Economic Times, EV sales will cross a million units in FY23, an increase of 84% over the previous year. Since electric vehicles are new in India, you may have questions about how they work, their drawbacks, and, most importantly, how can you insure an electric vehicle. This is exactly what we will be discussing in this article.

So, let’s begin!

Why Were Electric Vehicles Introduced?

Here are two main reasons why electric vehicles were introduced -

  1. Increasing Pollution

    The primary reason for introducing electric vehicles was to reduce pollution created by vehicles that run on fuels such as petrol, CNG, and diesel. These vehicles also release toxic gases, which contribute to a variety of dreadful diseases such as respiratory disorders, skin conditions, etc.

    Electric vehicles use electricity and do not emit harmful gases. And, if each of us purchases an electric vehicle, air pollution caused by vehicles will be drastically reduced.

  2. Depleting Natural Resources

    Natural resources are rapidly decreasing and experts believe that we will run out of natural resources within the next few decades. This is also one of the reasons for the introduction of electric vehicles.

    Electric vehicles, according to experts, create a lower carbon footprint over the course of a lifetime than cars and trucks that use traditional, internal combustion engines.

Types Of Electric Vehicles

Electric vehicles can be classified based on the level of electricity they consume.

  1. Battery Electric Vehicle (BEV)

    Battery Electric Vehicles, also known as all-electric vehicles, run entirely on batteries. The electricity used to drive the vehicle is stored in a large battery pack which can be charged by plugging it into the electricity grid. The charged battery pack then provides power to one or more electric motors to run the vehicle.

  2. Hybrid Electric Vehicle (HEV)

    Hybrid Electric Vehicles are also known as series hybrid or parallel hybrids. They have both an engine and an electric motor. The engine gets the energy from the fuel and the motor gets electricity from the batteries.

  3. Plug-in Hybrid Electric Vehicle (PHEV)

    Also known as series hybrids, Plug-in Hybrid Electric Vehicles have both an engine and a motor. In PHEVs, you can choose among the fuels such as petrol or alternative fuels like bio-diesel. A rechargeable battery pack can also be used to power them.

    PHEVs can be run in two modes -

    • All electric mode in which the motor and the batter will provide all the vehicle’s energy.

    • Hybrid mode, which uses both electricity and diesel/petrol.

  4. Fuel Cell Electric Vehicle (FCEV)

    FCEVs, also known as zero-emission vehicles, employ fuel cell technology to generate the electricity required to run the vehicle. In FCEV, the chemical energy of the fuel is directly converted into electric energy.

What Is Insurance For Electrical Vehicles?

Electric Vehicle Insurance, like Standard Vehicle Insurance for petrol and diesel vehicles, provides financial protection to your electric vehicle against damages caused by accidents, fire, natural calamities, theft, third-party, and so on.

Why Do You Need Insurance For Electric Vehicles?

You need Electric Vehicle Insurance for the same reasons why you need insurance for standard vehicles that run on fuels like petrol, diesel, or CNG.

  1. To Avoid Any Legal Consequences

    As per government norms, it is mandatory to have at least a Third-Party Insurance Policy for your vehicle.

  2. To Avoid Any Expensive Bills

    If your vehicle gets damaged due to an accident or any other mishap, it will call for a huge repair bill. A Comprehensive Insurance Policy will cover such expenses and you will not have to bear the entire bill amount.

  3. Third-party Liability Protection

    Having insurance for your vehicle will ensure that you are protected in the event that you cause injury to a third party or damage their property.

    For instance, Mahira has taken a Comprehensive Insurance Policy for her electric car. A few months later, she meets with an accident on the road with an expensive car which results in significant damages/liability through a court order. Because Mahira has an insurance policy, it will take care of the expenses.

What Is Covered By Electric Vehicle Insurance?

Here’s a list of things that an Electric Vehicle Insurance Policy will cover -

  1. Accidental Damage

    Any damages caused to the electric vehicle because of an accident will be covered.

  2. Damages To Third-Party

    The policy will cover any damages caused to the third-party individual or property.

    For instance, Shail’s electric car collided with Gaurang’s (a third-party individual’s) bike and it was severely damaged. The costs of repairing Gaurang's bike will be covered in this case by Shail's insurance company.

  3. Natural And Man-made Calamities

    Any damages caused to the electric vehicle due to natural calamities like earthquakes, floods, etc, or any man-made calamities like riots, vandalism, etc. will be covered.

    For instance, Himaya is on her way home from the office. There are some riots happening on the road and her electric car is damaged as a result. In this case, the insurer will pay for the damages.

  4. Accidental Death And Permanent Disability

    The insurer will pay in case the owner-driver passes away because of an accident or gets permanently disabled.

  5. Theft

    The policy will cover theft of the vehicle too.

    For instance, Ayushi parks her electric bike on the sidewalk and goes to the ATM to withdraw some cash. She is shocked to see that her bike is not where she put it when she returns. She notifies her insurance provider that her bike is stolen and files a claim. The insurer, in this case, will honour Ayushi’s claim.

  6. Fire Or Explosion

    Any damages caused to the electric vehicle due to fire or explosion will be covered by the insurance company.

What Is Not Covered By Electric Vehicle Insurance?

Here’s a list of exclusions, i.e., situations that are not covered by an Electric Vehicle Insurance Plan -

  1. Mechanical Or Electric Failure

    If the electric vehicle undergoes any damage due to mechanical or electric failure, it will not be covered by the policy.

    For instance, Naira’s electric bike stops working because of a mechanical fault. So, in case she raises a claim for this, the insurer won’t pay her anything as damage due to mechanical failure is excluded under the policy.

  2. Driving Under The Influence Of Alcohol

    If you drive the electric vehicle under the influence of alcohol, and any damages occur to the vehicle, they will not be covered by the insurer.

    For instance, Abhishek was driving his electric car under the influence of alcohol and got into an accident. In this case, the insurance company will not cover the expenses because he was under the influence of alcohol.

  3. Wear And Tear

    Regular wear and tear damages to the electric vehicle will not be covered by the insurance plan.

    For instance, light scratches, a few minor dents on the electric vehicle, etc. will not be covered by the insurance company.

How To Purchase A Policy For Your Electric Vehicle?

The process that you need to follow to buy insurance for your electric vehicle will be the same as the one followed for standard car insurance.

  1. Visiting The Website

    First and foremost, you will have to visit the website of the insurance company or aggregator platform and enter the details of your car, such as the make and model, registration year, RTO details, etc.

  2. Making The Payment

    Once you enter all the details, you will be directed to the quote page where you will find the premium and coverage details of your vehicle. You can go through the details and see if the details shown are proper. Make sure you also check that the fuel type is mentioned as ‘electric’. Then, you can select the desired coverage for your vehicle and complete the payment.

  3. Receiving The Policy Copy

    Once you make the payment on the website, the insurance policy for your electric vehicle will be generated. And, the insurance company or the web aggregator platform will email a copy of your policy to you.

    After you receive the policy, make sure you check if all details are mentioned correctly. In case of any errors, get them corrected by the insurer immediately - to avoid any hassles in case a claim arises under the policy.

That is all from our side today. We hope this article helped you gain enough clarity on how insurance for electric vehicles works and how you can go about buying one. Before you make the purchase, ensure you thoroughly understand the situations the policy will cover, the ones it won’t, the terms and conditions, etc.

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