As electric vehicles (EVs) gain traction across India, the demand for EV insurance has witnessed a surge. According to data from Policybazaar, the share of insurance policies sold for EVs has grown exponentially over the past three years, rising 16-fold.
From just 0.50% in FY23, EV insurance has surged to 8.2% by FY25, with projections showing a peak of 14% by March 2025.
Key factors driving the surge in EV insurance adoption
The surge in insurance adoption is not limited to cars; two-wheeler EVs are also witnessing a rise in coverage.
Policybazaar’s data indicates that bookings for two-wheeler EVs have doubled annually, growing from 10,000 policies last year to 20,000 this year. Interestingly, the vast majority of insured electric two-wheelers are scooters, which now make up 98-99% of the market share.
While electric vehicle insurance is booming across India, its adoption remains concentrated in urban areas, with cities like Delhi-NCR, Bangalore, Pune, Chennai, and Mumbai contributing to 55% of all EV insurance policies.
The trend is primarily driven by tier-1 cities, which account for 58% of all policies, highlighting that EV adoption is still predominantly an urban phenomenon.
Considerations when buying EV insurance
As the EV market continues to evolve, there are several key factors to consider when purchasing EV insurance:
Unique risks of EVs: Electric vehicles come with unique risks that traditional vehicles don’t face, such as battery damage, fire incidents, and charging station issues.
According to Mayur Kacholiya, Head of Motor Product & Actuarial at Digit Insurance, insurers are offering policies specifically designed to address these concerns.
These include coverage for battery damage, short circuits, and issues related to the vehicle’s electric panel or charger.
“As EVs are becoming more prevalent, insurers are increasingly offering coverage for the specific risks associated with these vehicles. For example, under Digit’s EV Shield add-on, losses to the vehicle battery are comprehensively covered,” Kacholiya explained.
Add-ons are essential: For both EV cars and two-wheelers, add-ons like zero depreciation, roadside assistance, battery protection, and charger cover are in high demand. These add-ons ensure that owners have comprehensive protection against the most common risks, such as battery theft or fire incidents during charging.
“EV owners prioritise comprehensive protection, especially for their battery, which is often the most expensive component of the vehicle,” said Amit Chhabra, CBO at Policybazaar.
Premium costs: Despite the higher risks associated with EVs, the premiums for EV insurance are comparable to those for traditional petrol vehicles.
The Tata Tigor EV, for example, has an insurance premium of ₹31,287, which is in line with a similar petrol variant’s cost of ₹23,522. Although the premium costs are similar, EV owners typically enjoy better value, with a more favourable premium-to-IDV (insured declared value) ratio compared to internal combustion engine (ICE) vehicles.
Government push for green mobility: While there are no direct discounts for EV insurance, government incentives for EV buyers — such as tax benefits, zero road tax, and subsidies under the FAME II scheme — have fuelled the growth of EVs. These incentives are likely to encourage more consumers to opt for EV insurance, as they further reduce the overall cost of owning an electric vehicle.
Claims process and common issues: EV insurance claims are often triggered by issues such as battery theft or fire incidents, with the cost of repairs or replacements being higher due to the expensive components of EVs. For example, fires caused by overheating during charging or damage to the battery and electric panels can lead to high-severity claims. As a result, insurers are continuously adapting their policies to cater to these unique needs.
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“The accelerating adoption of EV insurance signals India’s shift toward sustainable mobility. As consumers recognise the need for tailored protection, insurers are innovating to meet the unique risks posed by EVs,” said Amit Chhabra.