Tesla’s India debut prompts insurers to focus on EV-Specific motor covers

Plan to own a Tesla? Understand the nitty-gritties of insurance policies and premiums

US-based billionaire entrepreneur Elon Musk’s Tesla is now in India. The electric automaker made its much-awaited debut on July 15 with the opening of its first showroom in Mumbai.

It unveiled Model Y, the world's largest selling electric car, in two variants: Rear-Wheel Drive, priced at around Rs 60 lakh, and Long Range Rear-Wheel Drive, priced at over Rs 68 lakh.

The buzz around Tesla entry has prompted some insurers to offer some tailor-made add-ons as also promote their existing EV insurance policies. Some companies like Zurich Kotak General Insurance, ACKO and Liberty General Insurance have announced partnerships and launched tailor-made add-ons for Tesla. This apart, all general insurers offer EV insurance plans.

What’s on offer

Motor insurance has two components – third-party liability and own damage covers. The former is mandatory as per law. Insurers have come up with variations and improvisations on the own damage side.

Zurich Kotak General Insurance is offering a bundled cover, Car Secure – EV Protect, for Tesla and EV owners. “It is tailored for electric vehicles, covering crucial components like the battery, motor, and charger against issues such as short circuits, water damage, overheating, and electrical faults. This bundled coverage was created with the requirements of Tesla in mind, which includes battery cover, motor cover and charger cover,” says Pankaj Verma, Chief Technical Officer (Products & Underwriting), Zurich Kotak General Insurance Company (India) Limited.

The add-ons, say industry-watchers, are crucial for such vehicles. "EVs operate differently from petrol or diesel vehicles, especially in terms of components like batteries and electric motors. Besides third-party liability and own damage covers, insurers offer dedicated add-ons including motor protector (covers damage to the electric motor)and battery cover (which is critical given the high replacement cost of EV batteries)," says Viren Ahuja, Co-founder, CoverGrow, an insurtech firm.

In addition, EV insurance policies offer coverages and add-ons that are relevant for regular, ICE cars too. For instance, zero depreciation of replaced parts, consumables cover for repair materials, and a return-to-invoice feature that reimburses the full original value in case of theft or total loss.

Also read: Tesla Model Y launched in India at Rs 60 lakh

Batteries, electric motor coverages key

While the base policy would be the same for Internal Combustion Engine (ICE) as well as electric vehicles, insurers do offer some EV-specific add-ons.

“Compared to ICE vehicles, electric vehicles (EVs) come with their own unique set of needs and risks. EVs are built differently, and so are their vulnerabilities. The EV Shield covers critical components like the battery and electric motor, especially in cases of accidents or external damage. Issues like water ingression and short circuits, which can be costly and disruptive are also covered under the policy. This ensures you are protected in case your battery needs repair or replacement due to these factors,” says Adarsh Agarwal, Appointed Actuary, Digit Insurance, which offers an add-on - EV Shield add-on cover under its own damage cover - to protect four-wheelers, including hybrid models.

Digit’s EV shield also comes with three optional coverages. For example, it can cover damages (including from animal attacks or scratches) to the panel, which can lead to a loss worth 8-15 percent of the vehicle’s price. Also, both portable and mounted chargers are covered for damage or loss. Its EV roadside assistance feature offers mobile charging (up to 30 minutes or 30 percent charge), or towing services up to 50 km if charging fails. “Any damage due to water ingression or short circuit or accidents, leading to loss or damage to the vehicle’s battery is also typically covered,” Agarwal adds.

For EVs, battery protect is a critical add-on. “Battery protect is a very important add-on for EVs. It covers losses due to damage to the car’s battery in the case of accidents, voltage fluctuations and so on,” explains Amit Chhabra, Chief Business officer, Policybazaar.com.

Higher premiums for high-end cars

Insuring a Tesla is costlier than a regular ICE or even mid-range EV vehicle. The premium is influenced by multiple factors including battery capacity, vehicle value, and location.

“At this point, we can say that our annual premiums will range between Rs 80,000 to Rs 1,25,000 for Model Y, depending on the type of coverage and choice of add-ons,” says Verma. The vehicle’s insured declared value (IDV), location as also battery type and capacity will also influence the premiums. According to Agarwal, Digit’s own damage premium for a Model Y ranges from Rs 60,000 to Rs 75,000 per year. “Premiums for high-end EVs with advanced features and larger battery packs tend to be on the higher side, while compact or entry-level EVs typically fall in the lower range,” he says.

Also read: Electric Vehicle Insurance: Premiums are high, but insurers are evolving new offerings

Exclusions apply: Understand the fine print

The exclusions are largely common to ICE as well as electric vehicles, but some differences exist. “Claims made without prior approval, damage from regular wear and tear, and issues resulting from untimely battery charging or discharge are excluded. Likewise, losses that occur due to repairs by unauthorised personnel, poor workmanship, wilful negligence, or the use of accessories for commercial purposes are not covered,” says Verma.

Then, there are some exclusions that are generic in nature. For example, driving under the influence of alcohol. Or, driving in a flooded area. If you crank up the engine in a waterlogged street, it becomes intentional damage. So users should avoid doing that,” says Chhabra.