"Market Intelligence for High-Geared Performance"
The global Electric Vehicle (EV) insurance market size was valued at USD 40.27 billion in 2021 and is projected to grow from USD 64.18 billion in 2022 to USD 687.62 billion by 2029, exhibiting a CAGR of 40.33% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with Electric Vehicle (EV) insurance experiencing higher-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global market exhibited a growth of 41.38% in 2020 as compared to 2019.
As the demand for electric vehicles is increasing worldwide, so is the demand for Electric Vehicle (EV) insurance services. Rising fossil fuel prices, government focus on influencing EV adoption, and environmental concerns among the populace are some of the factors responsible for the rapid EV adoption. However, at the current stage of EV penetration, the cost of electric vehicles is significantly higher than their counterparts due to costly lithium-ion batteries. Therefore, insuring an EV has become a necessity among EV buyers.
Various repairs, battery replacement costs, and other damage repairs are significantly expensive compared to the repairs associated with conventional cars. For instance, EV battery replacement costs can vary from USD 2,500 to 20,000 based on the EV model and battery capacity. Hence, the adoption of EV insurance to avoid such expensive repair costs is driving the market growth
Increasing EV Sales Amid COVID-19 Pandemic Boosted Market Growth
During the COVID-19 pandemic, the surging cost of raw materials due to disrupted supply chains and closure of manufacturing facilities negatively impacted the overall automotive industry. However, electric vehicle insurance service providers remained immune to these changes up to some extent, owing to rising penetration of EVs worldwide. Electric vehicle sales witnessed a significant rise during COVID-19. Supportive regulatory framework, environmental and health concerns among the populace, and rising demand for private transport to avoid unnecessary social interactions are some of the factors that fueled EV sales, further accelerating the demand for EV insurance worldwide.
Moreover, the reduced number of accidental damage and repair claims due to government-enforced lockdowns and travel restrictions has fueled the profitability of car insurance companies. This has further enabled insurance companies to offer discounted premiums to attract new customers. For instance, In April 2020, due to reduced driving and claims trends, State Farm announced the Good Neighbor Relief Program, providing credit/dividends to auto insurance customers. The insurance company also reduced premium rates in every state. Along with these two actions, the company returned USD 4.2 billion in savings to its customers.
Request a Free sample to learn more about this report.
Rising Trend for Adoption of Usage-Based Insurance (UBI) to Propel the Market
The rising awareness and increasing adoption of UBI among EV buyers are driving market growth. Insurance companies, including Liberty Mutual Insurance Company, Allstate Insurance Company, State Farm Automobile Mutual Insurance Company, and others are designing solutions and technologies that can analyze driver behavior and vehicle data accurately. The companies aim to improve their UBI offerings by accurate determination of premiums.
Under the usage-based insurance service plan, the premium is basically dependent on the driving behavior of any individual, where the driving performance is observed and recorded by booking in-vehicle monitoring devices and hence charging the premium accordingly. Furthermore, UBI is typically powered by telecommunications technology and accessed in the vehicle through a plug-in or pre-installed device in the vehicle's system. These devices can also be accessed through mobile applications hence providing insurers with a variety of data, including the vehicle being driven, how it is driven and where it is driven. This, in turn, reduces annual insurance premiums paid by the consumers, further driving the demand for UBI Electric Vehicle (EV) insurance services.
Leading insurance service providers and EV suppliers are focused on offering UBI EV insurance services for customer convenience. For instance, in 2021, Tesla introduced its first usage-based Electric Vehicle (EV) insurance product in Texas, U.S. The premiums will be centered on Tesla's proprietary safety score, calculated based on a customer's real-time driving behavior.
Surging Awareness and Demand for Electric Vehicle (EV) Insurance to Aid Market Proliferation
In recent years, insurance for electric cars has been much easier to get than it used to be until 2017. Most insurance providers are offering some form of car insurance for electric vehicles. For instance, Mitsubishi i-MiEV is one of the most affordable electric vehicles on the market, starting at USD 22,995. The Mitsubishi i-MiEV is also affordable to insure, with an average yearly rate of USD 1,474.
Insurers are consumer-centric and want to design & provide policies and programs that work toward satisfying their customer's needs and expectations. Insurers are, therefore, at the forefront of addressing changes with respect to the risk involved in new driving habits and types of EVs.
The coverage provided for EVs is almost similar to standard auto insurance policies, including collision, comprehensive, liability, and bodily injury. Some insurance providers also offer discounts specifically for electric vehicles. For instance, Allstate, an insurance company, provides special discounts on EVs, provides liability coverage, collision coverage, medical payment coverage, personal injury protection, and others.
Several EV companies have also started offering EV insurance on their models. For instance, Tesla, one of the prominent electric vehicle manufacturers in the market, has started offering their own insurance on electric cars, called Tesla Insurance. Therefore, rising awareness and availability of these insurance policies offered by leading players are aiding market expansion.
Rising Government Initiatives for Rapid Electrification to Promote Market Expansion
Supportive government regulations such as rebates, subsidies, and tax exemptions are expected to boost the sale of electric vehicles, further creating a conducive growth environment for market players. For instance, in May 2019, the Canadian government launched incentives for a zero-emission vehicle program, which, depending on the EV model, can lead to a rebate of up to USD 5,000. In Ontario, vehicle owners are eligible to receive USD 1,000 toward the purchase of a used BEV or PHEV car through Plug’n Drive in exchange for an old fossil fuel-powered car. Similarly, the Go Electric Program from British Columbia offers rebates of up to USD 3000 for lease or purchase of a new EV.
High Insurance Cost of Electric Vehicles is Likely to Hamper Market Growth
High insurance rates for EVs than the average gas or diesel-powered vehicles is one of the factors restraining market proliferation. EVs tend to cost more to purchase and repair due to their specialized and expensive parts. For instance, the car’s battery alone can cost thousands of dollars to repair or fix. The more it costs to repair or replace a vehicle, the more expensive it is to insure. For instance, in China, electric cars cost more than 20% more than fuel-powered cars. Similarly, in the U.S., insurance costs for electric cars are 15% more than combustion engine cars as electric cars are considered to be luxury vehicles in the U.S.
Increasing Demand for Emission-free Vehicles to Escalate Demand for BEVs
Based on propulsion type, the market is segmented into BEV and hybrid.
In 2021, the BEV segment held the largest Electric Vehicle (EV) insurance market share and is anticipated to continue its dominance throughout the forecast period. Increasing demand for emission-free vehicles and stringent emission norms enforced by the regulatory bodies are likely to influence the adoption of pure electric vehicles positively. For instance, according to the International Energy Agency (IEA), in 2021, nearly 4.7 million BEV cars were sold worldwide, whereas the total number of hybrid cars sold was 1.9 million units. Therefore, the rapidly growing demand for electric vehicle insurance services specially designed for pure electric vehicles is anticipated to boost growth of this segment.
The hybrid segment is also expected to witness significant expansion during the forecast period. Increasing demand for hybrid vehicles in developing and underdeveloped regions with a lack of EV ecosystem and EV infrastructure is expected to propel the segment growth in the years to come.
Passenger Cars Segment to Lead Owing to Surge in Demand for Private Transport
Based on vehicle type, the market is segmented into passenger cars and commercial vehicles.
The passenger cars segment held the largest market share in 2021 and is anticipated to continue its leading position till 2029. After the COVID-19 pandemic, the surge in demand for private transport and the launch of passenger EVs are accelerating the adoption of EV insurance designed for passenger cars or private transport. Moreover, the rate of electrification of passenger cars is significantly higher compared to commercial vehicles. Hence, insurers' focus on providing insurance offers on various top-selling luxury electric SUVs and sedans, such as Tesla Model 3, Tesla Model Y, and others, is likely to accelerate the segment growth over the forecast period.
The commercial vehicle segment held a considerable share in 2021. Rising adoption of newly designed insurances, such as UBI, that charge insurance premiums based on analyzing driver behavior through telematics devices and also provide real-time fleet information is expected to augment the segment growth.
To know how our report can help streamline your business, Speak to Analyst
Accidental Damage Segment to Dominate Due to Rising Road Traffic Congestion
Based on coverage type, the market is segmented into accidental damage, theft or malicious damage, car battery & auto parts replacement, and others.
The accidental damage segment held the largest market share in 2021. Accidental damage is one of the highly in-demand insurance coverages that is a part of most of the standard Electric Vehicle (EV) insurances offered by the leading players. Moreover, due to increasing road traffic congestion and road crashes, the demand for accidental damage coverage has been increasing among drivers, further fueling the segment's growth.
The car battery & auto parts replacement segment is anticipated to witness the fastest growth rate during the forecast period. Car battery is the most expensive part of an EV. Therefore, the cost of replacing the battery is significantly high. Hence, most EV owners opt for an insurance plan that covers car battery replacement. Additionally, most of the standard insurance coverage plans designed for electric vehicles include car battery replacement as a part of an insurance benefit. All these factors are likely to boost the segment growth.
Asia Pacific Electric Vehicle (EV) Insurance Market Size, 2021 (USD Billion)
To get more information on the regional analysis of this market, Request a Free sample
Asia Pacific dominated the global market with a market size of USD 19.40 billion in 2021 and is expected to retain its position throughout the forecast period. The rapid electrification of passenger and commercial transport in economies such as China, Japan, South Korea, and India is likely to elevate market growth in the region. Additionally, the Chinese government’s initiatives to limit conventional car sales, coupled with the developing EV infrastructure and connectivity, are accelerating EV sales in the region, further propelling the demand for Electric Vehicle (EV) insurance. Moreover, the rising penetration of EVs in developing economies of APAC, such as India, is also anticipated to boost the demand for this type of insurance in the coming years.
Europe is expected to witness significant growth during the forecast period. Increasing number of stringent emission norms enforced by the European Union coupled with favorable regulatory policies in the region, such as incentives and subsidies on EV purchases, are influencing EV sales in the region, and further driving the demand for Electric Vehicle (EV) insurance in the region. In 2021, EV sales in Europe were the second highest after China. As per the IEA, nearly 2.3 million units of EVs were sold in Europe in 2021.
North America has significant penetration of Electric Vehicle (EV) insurance. Moreover, the rising adoption of UBI in the region offered by leading companies such as Tesla is likely to boost the Electric Vehicle (EV) insurance market growth in the region. Additionally, the presence of leading players in the region, coupled with the availability of the EV ecosystem, is fueling the adoption of commercial EVs in the region. Therefore, increasing demand for UBI insurance for effective fleet management through telematics and lower insurance premium through safe driving is likely to drive the market growth in the region.
The rest of the world, including South America and the Middle East & Africa, is expected to witness significant growth due to increasing penetration of EVs in Brazil, Argentina, and others.
Insurers' Partnership with EV Manufacturers to Drive the Competition
The market is significantly consolidated and led by several global players operating in this industry. The companies are focused on expanding their insurance service portfolio by introducing new insurance services specially designed for electric vehicles. Moreover, companies are also focused on partnering with leading EV manufacturers to target EV sales and expand the customer base significantly.
With its Strong Position in North America, Zurich is one of the Leading Players in the Market
Zurich Insurance Group is a Switzerland-based insurance company that operates in three core segments – global life, general insurance, and farmers. The company operates in over 210 countries and territories. The group is a multi-line insurer that serves its customers in global and local markets. Their customers include individuals, small businesses, mid-sized and large companies, as well as multinational corporations. The group has maintained a strong position in North America and Europe as a provider of insurance to individuals, commercial operations, and global corporate customers, as well as growing positions in Asia Pacific and Latin America
An Infographic Representation of Electric Vehicle (EV) Insurance Market
To get information on various segments, share your queries with us
The research report provides a detailed analysis of the market and focuses on key aspects such as leading companies, insurance services, vehicle type, and propulsion type. Besides this, the report offers insights into market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that have contributed to the growth of the market in recent years.
Value (USD Billion)
By Propulsion Type
By Vehicle Type
By Coverage Type
Fortune Business Insights says that the market was valued at USD 40.27 billion in 2021 and is projected to reach USD 687.62 billion in 2029.
The market is expected to register a CAGR of 40.33% during the forecast period 2022-2029.
Increasing EV sales is predicted to drive the market growth.
Asia Pacific led the global market in 2021.
“This report is really well done and we really appreciate it! Again, I may have questions as we dig in deeper. Thanks again for some really good work.”- U.S.-based biotechnology company focussing on treatment of chronic pain.
“Kudos to your team. Thank you very much for your support and agility to answer our questions.”- Europe-based provider of solutions to automate data centre operations.
“We appreciate you and your team taking out time to share the report and data file with us, and we are grateful for the flexibility provided to modify the document as per request. This does help us in our business decision making. We would be pleased to work with you again, and hope to continue our business relationship long into the future.”- India-based manufacturer of industrial and specialty intermediates with a strong global presence.
“I want to first congratulate you on the great work done on the Medical Platforms project. Thank you so much for all your efforts.”- One of the largest cosmetics company in the world.
“Thank you very much. I really appreciate the work your team has done. I feel very comfortable recommending your services to some of the other startups that I’m working with, and will likely establish a good long partnership with you.”- U.S. based startup operating in the cultivated meat market.
“We received the below report on the U.S. market from you. We were very satisfied with the report.”- UGlobal hearing aids manufacturer.
“I just finished my first pass-through of the report. Great work! Thank you!”- U.S. based solar racking solutions provider.
“Thanks again for the great work on our last partnership. We are ramping up a new project to understand the imaging and imaging service and distribution market in the U.S.”- World’s leading advisory firm.
“We feel positive about the results. Based on the presented results, we will do strategic review of this new information and might commission a detailed study on some of the modules included in the report after end of the year. Overall we are very satisfied and please pass on the praise to the team. Thank you for the co-operation!”- Germany based machine construction company.
“Thank you very much for the very good report. I have another requirement on cutting tools, paper crafts and decorative items.”- Japanese manufacturing company of stationery products.
“We are happy with the professionalism of your in-house research team as well as the quality of your research reports. Looking forward to work together on similar projects”- One of the Leading Food Companies in Germany
“We appreciate the teamwork and efficiency for such an exhaustive and comprehensive report. The data offered to us was exactly what we were looking for. Thank you!”- Intuitive Surgical
“I recommend Fortune Business Insights for their honesty and flexibility. Not only that they were very responsive and dealt with all my questions very quickly but they also responded honestly and flexibly to the detailed requests from us in preparing the research report. We value them as a research company worthy of building long-term relationships.”- Major Food Company in Japan
“Well done Fortune Business Insights! The report covered all the points and was very detailed. Looking forward to work together in the future”- Ziering Medical
“It has been a delightful experience working with you guys. Thank you Fortune Business Insights for your efforts and prompt response”- Major Manufacturer of Precision Machine Parts in India
“I had a great experience working with Fortune Business Insights. The report was very accurate and as per my requirements. Very satisfied with the overall report as it has helped me to build strategies for my business”- Hewlett-Packard
“This is regarding the recent report I bought from Fortune Business insights. Remarkable job and great efforts by your research team. I would also like to thank the back end team for offering a continuous support and stitching together a report that is so comprehensive and exhaustive”- Global Management Consulting Firm
“Please pass on our sincere thanks to the whole team at Fortune Business Insights. This is a very good piece of work and will be very helpful to us going forward. We know where we will be getting business intelligence from in the future.”- UK-based Start-up in the Medical Devices Sector
“Thank you for sending the market report and data. It looks quite comprehensive and the data is exactly what I was looking for. I appreciate the timeliness and responsiveness of you and your team.”- One of the Largest Companies in the Defence Industry