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EV insurance in limbo amid battery, spare part risks
Even without coverage for batteries, customers may need to pay more in insurance premiums for electric vehicle protection, due to the limited availability of spare parts.
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A salesman presents the Wuling Air EV electric car to visitors at a shopping mall in Jakarta on Feb. 5, 2023. (Reuters/Willy Kurniawan)
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nsurance firms have expressed support for the government's push for electric vehicles (EVs), but due to the costly batteries and limited availability of spare parts, coverage for EVs may not be cheap compared with conventional vehicle insurance.
Unless the government is willing to provide subsidies, an analyst predicted, insurers would charge higher premiums for EVs. The coverage most likely would also exclude protection for batteries that were still under warranty by the manufacturers.
Bern Dwyanto, executive director at the Indonesian General Insurance Association (AAUI), said auto insurance was one of the main contributors to general insurance growth in the country.
AAUI data show that auto insurance was the second-biggest category in general insurance by total premium value, only losing out to property insurance. Its premium value increased 15.7 percent to Rp 18.15 trillion (US$1.22 billion) last year.
That is why the association generally supports the push for EV adoption, according to Bern, who noted however that new types of risks required deeper calculations and said insurance companies had begun to study coverage, pricing and risk management for EV insurance.
"[The association] established a working committee in January to accelerate the process. The team will be responsible for producing a study on EV insurance, including the wording, premiums and deductibles," Bern told The Jakarta Post on Wednesday.
Bern added that auto insurance for conventional vehicles and EVs could be separated due to the difference in risk.
