As EV sales soar, insurance packages need to follow. Yet EVs typically generate higher insurance costs than traditional equivalents, simply because EVs are more likely to damage as vehicle age, and often with higher battery replacement costs for insurers to pay claims.
In the last month of 2021, the Insurance Association of China (IAC) brought NEVs insurance, to all buyers of NEVs including electric vehicles, fuel cell vehicles, and plug-in hybrid electric vehicles.
According to netizens in China, insurance for Tesla model in China may be as high as 80%. Though fees differ on varying degrees, rates have risen between 16% and 50% for Xpeng, Nio and Li Auto.
According to China Association of Automobile Manufacturers, China produced 3.023 million NEVs and sold 2.99 million from January to November in 2021, a new record that achieved nearly 170% growth year on year. However, all sunshine without shade is not possible.
Over the past three years, at least 250 battery fires were reported, causing backlash against high-profile brands like Tesla and BYD. The following compensation from insurance companies did not do well in deflating the tension between consumers and car makers because the insurance policies were not suitable for the new cases.
Against this backdrop, the newly released New Energy Vehicle Commercial Insurance Exclusive Clauses (Trial) (hereinafter referred to as “the terms” ) by IAC is undoubtedly welcoming to millions of NEVs drivers.
The terms offer the insurance policies exclusive to NEVs, such as the external power grid malfunction insurance, and the self-use charging pile liability insurance.
The terms also cover the compensation for batteries, energy storage system, electric motors, and control system, though battery loss and decay is not included. This move is expected to reduce the cost of insurance for about 80% NEVs buyers.
“Now the insurance is more compressive in ways that it even covers the charging pile. These clauses save potential NEVs buyers from worrying about insurance,” said an employee from PICC.
However, battery decay is not covered in insurance.
The New Energy Vehicle Commercial Insurance Exclusive Clauses (Trial) went live at the end of December, 2021 and NEVs owners can purchase the insurance through 12 major insurance companies now.