UAE electric vehicle premiums surge but experts remain bullish as market grows

Insuring an electric car in the UAE has become much more costly, after last year’s record floods, but industry experts believe the future remains bright for the vehicle segment as sales increase.

Insurancemarket.ae, one of the country’s leading providers, said insuring an electric vehicle on average costs 72 per cent more on average than a petrol or diesel-powered alternative.

Figures compiled by the company show the average comprehensive EV policy currently stands at about Dh4,992 a year, compared to Dh2,895 for regular internal combustion engine vehicles, when comparing vehicles of similar body type.

“Repair costs for EVs are higher due to specialised parts and battery systems,” said Hitesh Motwani, deputy chief executive of the insurance group.

“There are fewer authorised repair centres, and parts often have to be shipped internationally.”

The repair problems were brought into sharp focus by the unprecedented floods that hit the UAE in April 2004, when mass EV battery failures drove up insurance claims.

Yet Mr Motwani believes that the market is entering a “transition phase” that will see more nuanced pricing, factoring in battery age, charging behaviour and self-driving features.

“More insurers are also partnering with authorised EV dealers to streamline the repairs and claim services,” he said. “We’re watching the space evolve from novelty to norm – and as that happens, customers can expect more competitive, data-driven pricing, but also a need to be more informed buyers.”

EVs are expected to make up more than 15 per cent of all sales in the UAE by 2030, and could reach about 110,500 vehicles five years later, PwC’s recently released Mobility Outlook report found.

The UAE has set an ambitious target of having EVs make up half of the cars on the roads by 2050, in support of the nation’s net-zero drive.