UAE: EV insurance premiums 20-35% higher than other cars despite market stability

Dubai: Despite stable car insurance prices across the UAE since early 2025, premiums for electric vehicles (EVs) remain 20 per cent to 35 per cent higher than for conventional cars, according to insurance experts and automotive specialists, Al Khaleej newspaper reported. 

The trend comes as the UAE continues to lead the Gulf in electric and hybrid vehicle sales, with around 24,000 units sold in 2024. 

Industry experts attribute the higher premiums to the high cost of EV batteries and motors, which account for up to 40per cent of a vehicle’s total value, as well as the limited availability of spare parts and a shortage of specialized repair workshops capable of handling complex electrical systems. 

EVs also record higher claim ratios, 8 per cent to 12 per cent compared to 5 per cent to 7 per cent for conventional cars, due to their intricate electronics and integrated body structures, which drive up repair costs.

Some insurers have introduced a “risk loading fee” on EV policies, citing a lack of historical accident data and concerns over the vehicles’ high speed and lightweight design, which increase the potential for serious crashes.

The absence of authorized dealers for certain Chinese EV brands has further complicated maintenance, resulting in delays and higher repair expenses.

According to industry figures, annual EV insurance costs in the UAE average between Dh3,500 and Dh8,000, depending on the make and model, compared with Dh3,000-6,000 for traditional cars of similar value.

This price gap has led many EV owners to opt for third-party liability insurance instead of comprehensive coverage, while others source replacement parts directly from overseas suppliers to cut costs and minimize downtime.

“Electric vehicles generally have higher claim rates due to the cost of components and the sensitivity of electrical systems,” said Ezzat Al Aghwani, Executive Director of Vehicle Recovery and Salvage at Skoon Insurance. “A damaged battery alone can total a vehicle, with replacement costs ranging from Dh60,000 to Dh80,000. Only a limited number of workshops are equipped to handle such repairs.”

To manage the added risk, insurers are increasingly specifying battery coverage clauses, including protection against total or partial damage caused by accidents, but excluding improper charging or the use of uncertified chargers. Some companies have also introduced roadside charging assistance for EVs that run out of power mid-journey.

George Al Ashqar, advisor to Fidelity Insurance Services, said the absence of authorized dealerships for certain Chinese EV brands has created “uncertainty in the market,” as the lack of genuine spare parts increases repair costs and customer frustration.

Saif Al Hammadi, founder of EV GATE Center, noted that repair costs are further inflated by the design of EV bodies, which are typically manufactured as single-frame units rather than modular components. “Even minor damage often requires replacing larger sections of the vehicle,” he said.

As a result, many EV owners now opt for minimal insurance coverage or self-source parts internationally. While most accidents do not involve electrical failures, repair costs for bodywork alone can reach Dh2,000 per incident, making comprehensive insurance less cost-effective for many drivers.

Industry experts say the current premium gap is likely to persist until EV repair infrastructure, spare parts availability, and accident data maturity catch up with the rapid growth in electric mobility across the UAE.