The number of electric vehicles (EVs) in the UAE is increasing every year. The reasons for the increase are multiple. One reason is the appeal of EVs to buyers. They are modern, sophisticated cars when compared to your standard car. Likewise, they offer savings on fuel too. Another reason is that the UAE government is committed to reducing the carbon emissions by introducing eco-friendly cars.
To realize their vision of reducing carbon emissions, UAE has introduced various incentives for EVs. The pay and park rule do not apply to owners of EVs. They are also exempt from RTA car registration renewal fees. In addition to these, there are various free public charging stations available for EVs.
Insuring your EV can be Troubling
However, while EVs are no doubt great for the owner and the environment, insurance providers are caught in a limbo. One would think that insurance of an EV is similar to that of a petrol or diesel car. But it is not the case. The reason is that while the value of the EV can be determined easily, the value of parts is difficult to ascertain.
Issam Mouslimani, head of regional retail product offering at insurer Axa Gulf, says that,
“The average claim cost isn’t very clear.”
Therefore, it makes it difficult for UAE insurance providers to provide an effective insurance policy which meets their requirements and those of the car owners as well. Apart from the difficulty in determining the value of the parts, the lack of historical data makes it even more difficult to set the right provisions for an EV insurance policy.
Historical data like the number of average accidents is vital to insurance companies in determining the premium for their insurance policies. Nevertheless, insurance companies are now starting to offer comprehensive insurance policies to owners of EVs. Despite it, many claim that the insurance costs are too high for EVs.
They argue that the average price of an EV is quite higher than a petrol or diesel-fuelled vehicle. They are already paying good money for their EV, and the insurance policy further balloons this cost. The benefits offered by the UAE government to EV owners are too little when compared with these costs. Therefore, people are asking for cuts in insurance policy rates for EVs or introducing subsidies.
At the moment, there is no news that the UAE government or the insurance providers are looking to slash rates. Nevertheless, insurance providers accept that the overall cost of owning an EV is quite high. If vital steps are not taken by the stakeholders, it will be difficult to realize the government’s vision of reducing carbon emissions by replacing 20% of total cars in the UAE with hybrid or EVs by 2030.
Owning an EV shows your commitment to the environment. But for many, the overall cost of owning an EV is quite worrying. Therefore, insurance providers, the UAE government, and other stakeholders need to sit together to find a feasible solution. In fact, it is not just the UAE where insurance providers are facing difficulty, other countries are facing similar issues in determining the insurance policy for an EV.