EV battery insurance: What you need to know before you purchase

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Electric vehicles (EVs) are revolutionising personal transportation, but they pose special challenges—most notably, battery cost. The battery is the most expensive part of an EV, usually 30% to 50% of the vehicle's total cost. Whereas most EVs have a warranty on the battery from the manufacturer, this typically lasts only 8 years or a set mileage and does not protect against all types of damage. This is why bespoke battery insurance is increasingly a key consideration for EV owners.

Gaps in cover within motor insurance

The majority of individuals believe their comprehensive car insurance protects them in all situations, but that isn't necessarily the case with EVs. Standard motor insurance will guard against external accidents or fire but exclude battery aging, overcharging harm, water ingress, or manufacturing flaws once the vehicle is out of warranty. Special battery coverage fills gaps, especially as EV batteries can be vulnerable to temperature shifts and charging errors.

What to look out for before purchasing battery insurance

Before deciding on a battery insurance policy, it's important to know what's actually covered. Look for a policy that covers accidental damage, battery component theft, performance loss, and damage from voltage variation or charging station malfunctions. You could also include coverage for towing fees and roadside emergency assistance, something that could greatly benefit EV motorists stranded due to a battery failure. Be certain to clarify whether the battery can be replaced with the coverage or the policy only covers repairs.

Battery depreciation and claim settlements

Depreciation is one of the primary considerations in insurance of EV batteries. Batteries being a component of a car depreciate year after year, and insurers can settle claims based on depreciated value instead of actual cost. Check the insurer's depreciation policy and claim procedure to be spared any surprise. Some policies also include add-ons like zero-depreciation battery cover that could be the price of a few extra premiums for the peace of mind.

Cost-benefit analysis: Is it worth it?

Though insurance on batteries does incur an expense, it can offer good long-term financial protection. EV battery replacement, which costs between ₹3 lakh and ₹7 lakh depending on the model, can even with a partial reimbursement prevent costly out-of-pocket expenses. However, one needs to weigh the premium against the possibility of claims, your car's age, and usage pattern. For new EVs or for cars with high mileage, battery insurance generally makes sense.

As electric vehicles become more common, knowing battery protection insurance is important. Since the battery is the source of performance and a costly component to replace, battery insurance can be a prudent measure. Carefully consider your EV usage, check coverage exclusions, understand the depreciation terms, and choose a plan that provides extensive battery protection aligned with your needs.