EV INSURANCE CHANGES IN 2026: WHAT BORROWERS AND INSURERS SHOULD PREPARE FOR

• Published on Feb 04, 2026
• Read Time 7 mins
• 

The green-vehicle (EVs) space has seen a 2.5x year-on-year rise in EV insurance purchases. EV vehicle insurers continue to revise policy structures and adjust premiums based on IRDAI reforms. The difference in quality of services and repair costs or battery-related claims has brought up a new set of rules and insurance behaviours.

Whether you own an electric two-wheeler, three-wheeler, or car, these changes will directly affect your annual premium and claim approvals, including your long-term cost of ownership.

EV Insurance Premiums Are Increasing

Understanding EV insurance changes in 2026 requires you to know why premium pricing is increasing:

• As EV technology advances, repair expenses have evolved as well. Specialized components and expert service requirements have made EV repairs around 20–30% higher than traditional ICE vehicles
• Battery‑related claims are rising, especially due to water ingress and damage — a trend that reflects India’s rapidly growing EV ecosystem and the need for strengthened battery protection
• Flood-prone cities like Mumbai and Chennai are experiencing higher motor insurance premiums.

Bonus Read: What makes a loan eco-friendly?

IRDAI’s “Use & File” Reform

IRDAI’s Use & File reform allows insurers to launch new EV‑specific products without prior approval. They can launch first and file later. Thus, we now see a surge in EV-specific covers:

• Battery protection
• Charger & wiring cover
• BMS (Battery Management System) failure cover
• Water ingress cover
• EV roadside assistance bundles

This is especially relevant for borrowers using e-rickshaw finance companies, electric scooter finance, or electric bike finance, where downtime directly affects income.

Increase in Add-on Adoption

One of the biggest 2026 shifts is that EV buyers are no longer choosing bare‑minimum insurance. Policybazaar’s 2026 report shows:

• 96% of new EV buyers opted for Zero Depreciation
• 83% added Roadside Assistance
• 74% added Consumables Cover
• 67% added Return‑to‑Invoice
• 61% added Engine/Water Protector

This is the first time India has seen such high add‑on penetration. This is because EV repairs for battery and electronic parts are expensive and require specialised workshops. Borrowers taking EV finance, EV loans, or three-wheeler auto loan products now treat add‑ons as essential protection.

Higher Usage-Based Insurance (PAYD/PAYG)

Usage-based insurance has passed its experimental phase. As per Autocar Professional FY26 trends, 15-20% of all EV insurance buyers now prefer to rely on Pay-As-You-Drive (PAYD) or Pay-As-You-Go (PAYG) policies. The better half of this group lives in urban centres. Above this, this is a big shift since EV owners typically drive fewer kilometres. This makes usage-based pricing financially attractive.

EV-Specific Covers Are Now Standard in 2026 Policies

Battery cover was optional in 2023-2024. But as we’ve leapt further into advanced EV vehicles and new underwriting rules, 2026 policies now routinely include traction battery protection and motor controller protection. Note that this change in insurance offerings is powered by FY25-FY26 claim data that shows battery and electronics failure as the most expensive claims.

Preference Towards “Protection-First” Policies

Long gone are the days of treating insurance as a compliance formality. Many Indian EV buyers are actively choosing protection-heavy, personalised policies in 2026. We’ve noticed how they now prioritise:

• Higher coverage
• More add-ons
• Personalised pricing
• Better claim support

Verdict

Putting all the recent data together, we can conclude that EV insurance in 2026 no longer links to basic 3rd-party or standard comprehensive plans. The three main forces running it are high-value EV claims, high adoption of add-ons, and the noticeable growth of usage-based insurance.

Though this combination has made EV insurance more expensive, it has ticked boxes of personalisation and better protection.

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FAQs

1. Why did EV insurance premiums increase in 2026?

Premiums rose because EV claim costs, especially for batteries, electronics, and water damage, increased significantly in FY25. Insurers adjusted pricing to match real claim data, and not speculation.

2. Is usage‑based insurance (PAYD/PAYG) worth it for EV owners?

Yes, especially for low‑mileage users. In FY26, 15–20% of EV buyers opted for PAYD/PAYG because it reduces premiums without reducing coverage.

3. Does telematics affect my EV insurance premium?

Yes. Insurers now use BMS data, charging behaviour, and driving patterns to price policies more accurately. Good habits can lower premiums.

4. Should I buy Return‑to‑Invoice (RTI) for my EV?

RTI is highly recommended because EV resale values are still stabilising. In case of total loss or theft, RTI ensures you receive the full invoice value.

5. Do commercial EVs face different insurance rules?

Yes. Due to higher claim ratios, insurers require battery‑health reports, telematics data, and stricter documentation for commercial EVs like e‑rickshaws and cargo three‑wheelers.

6. How do these insurance changes affect my EV loan?

Higher premiums increase annual ownership costs, but stronger protection reduces financial risk during the loan tenure. This helps borrowers avoid EMI disruptions caused by unexpected repair expenses.