China's Insurance Providers are Issuing New Policies for Electrified Vehicles, Which Costs More Than Standard Vehicle Insurance
【Summary】The Insurance Association of China (IAC), has launched new insurance guidelines specifically for New Energy Vehicles (NEVs) in the country. The new insurance policies take into account the risks of batteries, energy storage systems, electric motors and the control systems of electrified vehicles.
The Insurance Association of China (IAC), has launched new insurance guidelines specifically for New Energy Vehicles (NEVs) in the country. The IAC was founded in 2001 and conducts research and provides guidelines for companies issuing insurance premiums for motor vehicles in China.
The new clauses for electrified vehicles were issued by the IAC on Dec. 14 and the commercial insurance dedicated to new energy vehicles (NEVs) was officially launched for sale in China on Dec. 27.
NEVs in China are categorized as fuel cell vehicles (FCVs), plug-in hybrid electric vehicles (PHEVs), range-extended electric vehicles (REEVs), and other models powered by sources other than a combustion engine.
The IAC added the new insurance provisions after a year long study. In addition to standard liability insurance covering traffic accidents, NEVs include higher risks than combustion engine vehicles, including battery fires, which demand new types of insurance premiums, the IAC said.
According to the IAC, NEV buyers will be compensated for the accidents (including spontaneous combustion) happening when their cars are running, parked or being charged.
The clauses in insurance policies exclusive to NEVs, include external power grid malfunction insurance, the self-use charging pile loss insurance, and the self-use charging pile liability insurance, according to Chinese news outlet Gasgoo.
The new insurance policies will also take into account the risks of batteries, energy storage systems, electric motors and electric control systems of electrified vehicles.
However the new insurance coverage has resulted in significant increase in premiums of many NEV models, due to the higher costs of batteries and related electrical components which can be costly to replace if damaged in an accident.
Many insurance firms have raised the premium for NEV models due to the risks of battery fires as well as the higher costs to repair the vehicles in the event of an accident. Among the models that cost more to insure under the new guidelines from the IAC are Tesla vehicles, which sparked a heated discussion among EV buyers in China.
According to one local media outlet that cited information updated by Chinese insurer provider PICC, the total premium of a Tesla Model Y surged to 14,902 yuan ($2,340) on Dec. 27. The motor vehicle loss insurance coverage jumped the highest, with an annual premium that jumped to 12,736 yuan ($2,000). That's up from 5,759 yuan ($900) on Dec. 23.
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