Insurance premiums for electric vehicles (EVs) have increased at double the pace of fuel-powered cars after the heavy rains in the UAE in April 2024.
The premium hikes are attributed to costly repairs and total loss, reported Khaleej Times.
According to data shared by Insurancemarket.ae, the average insurance rates for EVs previously were around 2% to 2.5% of the vehicle's value. Between May and July 2024, these rates have steadily increased to approximately 3.5% to 4%, depending on the make and model of the EV.
The data also show that the average premium for EVs rose from AED3,906 ($1,063) in May to AED4,729 in July, reflecting a 21% increase. Comparatively, the overall average premium for petrol cars increased from AED2,100 to AED2,365 in the same period, a 12.6% increase in premiums.
“This increase reflects the heightened risk perception among insurers due to the damage caused by floods, particularly the vulnerability of EV batteries to water damage, which can lead to costly repairs or total losses,” said Insurancemarket.ae CEO Avinash Babur.
“EVs are typically more expensive to repair than traditional cars due to their sophisticated electronics and battery systems. For example, flood damage to an EV's battery can result in a total loss because replacing the battery is often prohibitively expensive. EVs require specialised skills and equipment for repairs, which can limit the number of workshops capable of handling these vehicles. This can lead to longer repair times and higher costs, making them less attractive to insure," Mr Babur told Khaleej Times in an interview.
"In cases of severe flooding, EVs are more likely to be declared total losses because water damage to the battery and electronic systems is often irreparable,” he added.
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