UAE's electric vehicle owners get relief - motor insurance drops

Dubai: Owners of electric vehicles (EVs) in the UAE are seeing declines on the motor insurance premiums they have been paying on renewals in the last 15 months.

This will come as a huge relief for these car owners and, at the same time, seen as crucial to expand the sales of new EV models in the UAE.  

Recent renewals have EV owners pay up to 9.5% less compared to a year ago. On average, they are paying around Dh5,270 on average for a renewal – that compares with Dh5,815 on renewals done during Q2-2025 and Dh5,437 on average in Q1-25, according to data from InsuranceMarket.ae.  

“The correction during Q3-25 to Dh5,270 is healthy and reflects changes in the types of EVs being insured,” said Avinash Babur, CEO of InsuranceMarket.ae. “There clearly is a more ‘refined’ understanding among UAE insurers of the risks associated with this segment.”

The drop in average motor premiums reflects the ‘changing mix’ of EVs being insured.

“What started with traditional EV brands like Tesla has now expanded to include a growing number of Chinese manufacturers,” said Babur.

“As these newer brands gain traction, we’re seeing more diversity in price points, risk profiles, and consequently, how premiums are being structured.”

Again, for EV owners, the insurance premium declines couldn’t have come at a better time. Many EV motor policies are up for renewals in the coming weeks. Especially after seeing significant spikes in what they had to pay on motor insurance after April 2024’s rains and extensive damages caused to vehicles by the flooding.

In fact, there are many dealerships who were grumbling about the impact high motor insurance rates was having on EV demand.

“Potential buyers are concerned that they will get an immediate hit on insurance after the first 12 months of car ownership, when they have free motor cover,” said a source at a leading Chinese car dealer.

“At the same time, we are having pressure from the car brands we represent to do something to ease buyer concerns. If motor insurance rates on EVs are dropping, that’s the best piece of news.”

Even with these concerns, EV sales in the UAE continue to see increases, going by all the new Teslas, BYDs and other models featuring newly issued number plates.

And there are more Chinese brands that are taking chunks of new market share in EVs, through extended warranties and after-sales support. Dealers in EVs hope that these longer term warranties will ease buyers’ worries about annual insurance premiums.

It makes sense for dealers to do so.

“While Chinese EVs remain attractive due to their competitive pricing and features, the cost of insuring them is rising rapidly, becoming a critical factor for buyers,” said Anas Mistareehi, CEO of eSanad.

“Due to a combination of evolving risks and market dynamics, EV owners are now paying approximately 4.5% of the vehicle’s value per year for insurance coverage — noticeably higher than the average for conventional fuel vehicles.

“If this continues, we may see the (UAE insurance) regulator step in to impose guidelines aimed at standardizing underwriting practices and improving pricing transparency across the EV segment.”

If the coming weeks show that there could be further declines in EV insurance rates, that will be more than enough for car owners and dealers.