With numerous news reports of electric scooters catching fire in the country coming to the fore, the question to ask is whether damages arising out of such incidents are covered under motor insurance or not.
A third-party insurance policy does not cover fire damages. India has two types of insurance policies: comprehensive and third-party. While the former offers fire cover, the latter does not, “said Indraneel Chatterjee, co-founder, RenewBuy.
Adarsh Agarwal, chief distribution officer, Digit Insurance, concurred and added “Claims arising out of fire are covered under a comprehensive motor insurance plan which includes the own damage (OD) cover in addition to a third-party liability cover.”
However, just buying a comprehensive policy does not guarantee cover as the payout largely depends on the cause of the fire. The claim will be rejected if the fire is caused by a breakdown of any components of the EV. “The user will face claim rejection if the vehicle catches fire due to mechanical defects like fuel seepage, oil leakage, overheating of the engine, etc. Similarly, insurers won’t entertain claims if there are sparks from the vehicle’s battery or tear in the electric wiring system, “said Chatterjee.
While the cause of recent EV fires has not been ascertained officially, many experts have claimed that thermal runaway, which results in battery heating up, could be the reason. If that’s true, then your claim could get rejected.
Apart from mechanical defects, if any modifications are made to the vehicle that tampers with its basic construct and may have contributed to the fire, then the claim could get rejected, said Agarwal. “It is advisable to not opt for modifications by unauthorized dealers as such changes may not get added to the Insured’s Declared Value (IDV) of the vehicle.”
There have been a few instances of detachable batteries of EVs exploding while being charged and so will not be covered under a standard policy, as per experts. “Technically, the insurance policy covers those components that are fitted in its correct place on the insured vehicle. So, if the batteries are not fitted in the vehicle, it may not be covered, “RKT Krishnan, head – motor claims, Royal Sundaram General Insurance.
The claim you get will depend on the extent of damage to the vehicle. “If the vehicle is repairable, the insurance company will pay for the replacement of damaged parts under an admissible claim, subject to deductions as per the policy terms and conditions. “If the vehicle is burnt beyond repairs, the policyholder will receive the IDV under an admissible claim subject to deductions as per the policy terms and conditions,” Krishnan said.
“It is advised not to go for a lower IDV simply because the premiums could be lower because this would impact the payout claims,” said Agarwal.
Further, the part that has caused the damage is not covered. “While the proximate cause is not covered, consequential losses can be covered. For instance, if the wiring was bad and it caused a short circuit due to which vehicle got burnt, the wiring will not be covered, “said Chatterjee.