How much does EV insurance cost?

How much does it cost to insure an electric vehicle in the UAE? It’s a great question with a myriad of answers. Asking car-owning friends, colleagues, and family members has a wide range of responses. However, the most common thread, or expectation, was that they thought it was cheaper than a traditional gas-powered vehicle. Why? Well, because the generalised view of EVs is that they’re supposed to be cheaper to own. The contrary is actually true – for now.

Despite their reputation for being cheaper to own, electric vehicles are generally more expensive to insure. This is primarily due to the higher cost of the vehicles themselves. For instance, the showroom price of a 2024 Polestar 2 long-range FWD (approx. AED 215,000) is significantly higher than a similar petrol-based 2024 Toyota Camry 3.5L Sport (approx. AED 138,900). 

According to a leading insurance comparison site – at the time of writing – the top-of-the-range Camry is AED 1,000 less to insure than the Polestar 2. Even the small, mighty 2024 Chevrolet Bolt EV is over AED 800 more expensive to insure than the Toyota family car.

The higher EV premiums issue is global, not UAE-specific. However, insurance on electric vehicles has continued to climb month on month across the country as the demand for fully comprehensive insurance has spun the market. 

While researching this article, we anonymously contacted several insurance brokers to obtain more information. Rumours in the industry have been swirling for a while about premium EV insurance ratcheting up by 30 per cent, and we were told by one brokerage that “this could be very true” due to the surge in EVs and Chinese cars in the country. 

We were also told to avoid one EV manufacturer altogether as insurance companies “don’t have an appetite for them” due to the cost of agency repairs in the event of a claim. Polestar and Tesla were named “stable” in terms of maintaining a consistent premium insurance cost. 

It’s a slightly depressing picture for the UAE, which is pushing for an electric future as part of its long-term goals. As it builds an impressive EV infrastructure to fulfil its 2050 carbon-neutral target, it would be disappointing for insurance companies to create unnecessary obstacles for consumers. 

There is hope on the horizon, however.  Across the Middle East, broker companies are slowly adapting to the increasing number of EVs and their associated costs.

A catalyst for this change in thinking is the sheer number of EVs on the roads in the UAE. A recent Statista Market Insights piece confirms that 2023 saw 4,461 sales of EVs (battery and hybrid) across the country. Compared to the measly 232 sales in 2019, it shows a significant increase and a country that is ready to embrace an EV future. Interest is only expected to go upwards, especially when you consider home-grown brands, such as Al Damani and Rabdan, are set to enter a market that is already rich with a wealth of options pouring in from other regions.

To put it bluntly, the knock-on effect is that an increase in EVs means an increase in the availability of parts in the country. This results in cheaper maintenance and repair costs through agencies and garages and less risk for insurance companies to cover these expenses. You can also add cutting-edge technologies that lengthen battery life and make chargers safer, which is another positive that insurers can gain more trust around.

As EVs become more commonplace, insurance premiums should stabilise. Whether that is at the current price points or even higher is anyone’s guess. There’s also the very real possibility that a government-led initiative could keep insurance premiums for electric vehicles down. Regardless of the outcome, fluctuations should be kept to a minimum. 

For the time being, EV owners can offset the costs with specific perks such as free parking, low charging costs, lower registration fees and more. For now, if you’re currently thinking about making the switch to an EV, be sure to shop around for an insurance premium that will fit your budget.

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