Insurers Adapt Motor Insurance for EVs with Performance-Linked Battery Coverage, Partnering with Automakers to Address Risks, Provide Residual Charging Protection & Guarantees
Mumbai: With electric vehicles (EVs) gaining rapid traction across India, insurers are redesigning motor insurance products to address a crucial risk — the EV battery, which represents the largest cost component of the vehicle. Unlike internal combustion engine (ICE) vehicles, where claims are usually linked to accidents or physical damage, battery performance failures may soon be included under insurance policies.
Performance-Linked Battery Coverage in the Works
Industry executives confirm that discussions are underway to introduce performance-linked battery cover, where insurance claims would be triggered if a battery underperforms during its guaranteed lifecycle.
“Today, in IC engines, we do not talk of performance. But in EVs, if a battery performs below a certain threshold, it can become a claim, which is currently not covered under motor insurance policies,” said Amit Ganorkar, MD & CEO, Tata AIG General Insurance.
He explained that while batteries typically begin with 100% State of Health (SOH) and gradually degrade over time, premature underperformance represents a financial loss. Hence, insurers are exploring products around residual charging and degradation thresholds.
Extended Warranties and Specialised Covers
Currently, many EV motor insurance policies already include battery warranties and extended warranties. Some products, however, still exclude battery coverage, leaving owners vulnerable to high replacement costs.
Insurers are now working with automakers to design specialised products such as:
- Residual charging protection
- Performance guarantees
- Flexible extended battery warranties
“These will become bigger covers in EVs, unlike ICE vehicles where the engine is rarely excluded or insured separately,” said an industry executive.
Global Models and New Product Design
Several insurers are also studying global models, particularly from other Asian EV markets, before launching similar offerings in India. Extended warranties and custom add-ons are being shaped to provide flexibility not seen in traditional auto policies.
Events such as urban flooding are also influencing product design. For example, in cases where EVs or hybrids are submerged, a full battery replacement is often necessary — a high-cost risk that insurers are factoring into new-age products.
Battery-as-a-Service Considered
Another trend insurers are watching closely is the battery-as-a-service (BaaS) model that some automakers are piloting. This could significantly reduce upfront costs for consumers, while shifting battery ownership and performance risks into the insurance framework.
The Road Ahead
Industry experts believe that battery-specific insurance will become central to EV policies, marking a significant departure from ICE insurance, where the engine is seldom treated separately. With EV adoption accelerating, insurers are positioning themselves to mitigate consumer risk while supporting India’s transition to clean mobility.
