China launches NEV-dedicated insurance, leading to increase in NEV premium

Shanghai (Gasgoo)- The commercial insurance dedicated to new energy vehicles (NEVs) was officially launched for sale in China on Dec. 27, resulting in significant increase in premium of many NEV models. 

Model Y

The newly-launched insurance is available for battery electric vehicles (BEVs), fuel cell vehicles (FCVs), plug-in hybrid electric vehicles (PHEVs), which contain range-extended electric vehicles (REEVs), and other models driven by new types of energy, according to the clauses issued by the Insurance Association of China (IAC) on Dec. 14.

Aside from traditional traffic accidents, NEVs face new risks including battery fires, demanding the innovation in insurance service, the IAC said, adding that the provisions were released after a study that lasted over one year.

According to the association, NEV buyers will be compensated for the accidents (including spontaneous combustion) happening when their cars are running, parked, or charged.

The clauses offer the insurance policies exclusive to NEVs, including the external power grid malfunction insurance, the self-use charging pile loss insurance, and the self-use charging pile liability insurance.

Compared to traditional vehicle insurances, the NEV-dedicated one will take into account the risks of batteries, energy storage system, electric motors and electric control system. Its advent is expected to dispel consumers' misgivings when they buy NEVs.

On the heels of the new insurance launch, many insurance firms raised the premium for NEV models due to the higher insurance benefits and wider insurance coverage. Of the models affected, the premium hike for Tesla’s models sparked a particular heated discussion among buyers.

According to a local media outlet, citing the information updated by Chinese insurer PICC, the total premium of a Model Y surged to 14,902 yuan ($2,340) on Dec. 27. Notably, the motor vehicle loss insurance posted the biggest growth, with its annual premium surging to 12,736 yuan ($2,000) from 5,759 yuan ($900) on Dec. 23.