Why Insurance Claims On EVs Catching Fire May Get Rejected

Do insurance companies cover electric vehicles catching fire? Here's what  experts say - BusinessToday

Excessive heating is the primary reason why an EV catches fire. The battery of the EV heats up, and when the heat combines with leaked fuel, the battery just explodes in flames. Given the frequent news of electric scooters catching fire nationwide, it’s crucial to inquire whether electric bike insurance covers damages from such incidents. 

The damages caused by fire are not covered by third-party electric vehicle policy in India.                           Fire-related claims are handled under comprehensive vehicle insurance, which includes own damage (OD) and third-party liability coverage.*^

^Claims are subject to terms and conditions set forth under motor insurance policy.

However, simply purchasing a comprehensive policy does not ensure coverage, as the payout is heavily influenced by the fire’s origin. The claim will be denied if any EV component fails to function properly and starts a fire. If the car catches fire owing to mechanical flaws such as fuel seepage, oil leaking, engine overheating, etc., the user will have their claim rejected. Similarly to this, insurers won’t consider claims if the vehicle’s battery flames or its electrical wiring is torn.^

     ^Claims are subject to terms and conditions set forth under motor insurance policy.

In addition to technical issues, the claim can be turned down if the vehicle has changes done that interfere with its fundamental design and may have caused the fire.^ It is strongly advised against selecting modifications that are carried out by unlicensed sellers. This is because those changes may not be included in the insured’s declared value (IDV) of the car. Thus, they won’t be covered under a typical policy. Electric bike insurance technically covers correctly installed parts in the insured vehicle, so it may not offer coverage if the batteries      are not installed in it.*           

The amount of your claim will depend on how badly the car was damaged. The insurance company will pay for damaged parts replacement under valid claims, subject to policy terms and conditions and deductions, if the vehicle is repairable.  The policyholder will receive the IDV under an admissible claim subject to deductions as per the policy terms and conditions if the vehicle is burnt beyond repair. Be advised not to select a lower IDV simply because the premiums could be lower. After all, this would impact the claims payout. ^*

^Claims are subject to terms and conditions set forth under motor insurance policy.

Additionally, the damaged component is not covered. Consequential losses may be covered even while the proximate cause is not. For instance, the wiring would not be covered if it was defective and caused a short circuit, which resulted in a burned-out vehicle.* 

Insurance claims related to Electric Vehicles (EVs) catching fire may face rejection due to various factors such as policy exclusions, improper maintenance, and non-compliance with safety guidelines.* It’s essential for EV owners to thoroughly understand their insurance policies, adhere to safety precautions, and ensure proper maintenance to mitigate the risk of claim denials in case of fire-related incidents.

*     Standard T&C Apply

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

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