With more electric vehicles (EVs) expected to hit UAE roads in the coming year, the new market may hit an insurance snag with uncertainties over repairs.
It is mandatory for every vehicle operating in the UAE to be covered by insurance with the premium, or the amount of money a customer pays for insurance, calculated based on numerous variables from the owner to the type of car.
A policyholder’s age, location and previous driving history is taken into account, coupled with the make and model of a car. But while the cost of parts has been compiled for petrol-fuelled cars, for EVs it is still a nascent market with little historical data.
“The average claim cost isn’t very clear,” said Issam Mouslimani, head of regional retail product offering at insurer Axa Gulf, which last month launched EV insurance coverage, although the policy is currently designed for Tesla owners in the UAE.
Its UAE plan will cover damage, third party injuries and property damage up to Dh3.5 million, as well as natural perils, Oman extension and free roadside assistance. Mr Mouslimani said the car’s value is the main insurance priority.
“The value of the car is very clear for Tesla, but what isn’t clear are the other components such as the expected cost of a certain part and expected number of accidents during the first year,” he said.
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Charging stations
■ See list of electric vehicle charging stations in Abu Dhabi and Dubai here.
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With Tesla’s recent launch in the UAE coupled with government policies such as Dubai’s target of 20 per cent EV and hybrid vehicles on the streets by 2030, the number of these eco-friendly cars throughout the country is expected to rise.
And for insurance, the segment is still very small. “It’s still very minor compared to our portfolio – less than 1 per cent,” Mr Mouslimani said. “But we see it moving forward and going in line with the national strategy of 20 per cent.”
The company’s early-mover status as the go-to insurer for EVs will be its biggest advantage in the region. “Any insurance company in this part of the world hasn’t had experience to insure such vehicles so we’re leveraging from global expertise,” he said.
Axa is already the insurer of choice for Alex Sanders, an Abu Dhabi Tesla owner. His 2015 Model S P90D with Ludicrous speed mode was purchased in full given that there were no financing options available. He paid about Dh500,000 for the car plus shipping and import duties.
Add insurance costs and that is an even larger figure. For comprehensive insurance, the Insurance Authority stipulates a minimum of Dh1,300 for a saloon and Dh2,000 for a 4x4, while the maximum will be 5 and 7 per cent of the car’s value, respectively.
Mr Sanders paid a Dh11,044 premium for his full comprehensive policy plan from Axa at 2.4 per cent – when the standard is around 5 per cent. “I was lucky and used a broker, Gargash Insurance – and insured other cars to make this possible,” he said.
lgraves@thenational.ae
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