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China Now Offers Exclusive Insurance for NEVs and Spontaneous Fire Risks Are Covered

On August 9, 2021, we told our readers that the IAC (Insurance Association of China) was discussing the inclusion of spontaneous fire coverage in EV insurances in the country. At the time, we were not aware of the association’s plans: to create specific insurance policies for NEVs (new energy vehicles). The first ones were presented on December 27.
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IAC set the rules for such exclusive insurance policies at the beginning of the month, and the Shanghai Insurance Exchange did not waste time. It launched the first NEV insurance trading platform on December 12, with 12 insurance companies offering policies that have electric and plug-in hybrid cars in mind. As you may imagine, spontaneous fire risks are covered.

According to CNEVPost, the goal is to offer insurance options that are both more convenient and more adequate to these vehicles, which are very different from ICE cars. The battery pack alone – whether it is a large (in EVs) or a smaller one (in PHEVs) – is a costly component that could easily make a minor crash turn into a total loss. The NEV policies have comprehensive coverage for motors, battery packs, and the systems that control them, such as the BMS and inverters.

It was a necessary move: China would have more than 6.78 million NEVs on its roads nowadays. With the exclusive insurance policies, about 80% of this fleet could get lower premiums to be protected. As the percentage clearly demonstrates, about 20% of these plug-in hybrids and electric cars did not benefit from the new policies. In at least one case, it would have made costs a lot higher.

A Weibo blogger stated that the Model Y ended up with a higher premium. Instead of paying RMB8,000 ($1,255.28 at the current exchange rate), the Tesla SUV has to pay RMB14,000 ($2,196.74). It was a 60% increase for the same RMB395,900 ($62,120) coverage. The reason for that increment was not disclosed, and the information is yet to be confirmed. However, it probably has to do with higher repair costs.

 

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