Why electric car insurance costs more in UAE — and when it can get cheaper

Dubai: Electric vehicles are gaining speed across the UAE, but many drivers are finding that owning one comes with hidden costs — especially when it comes to repairs and insurance.

While overall car insurance prices have stayed stable this year, premiums for electric vehicles remain about 20 to 35 per cent higher than for petrol cars, according to insurance experts.

The UAE continues to lead the Gulf in electric and hybrid vehicle adoption, with about 24,000 units sold in 2024, but insurance experts from Sukoon and Fidelity had earlier flagged that insurance and repair infrastructure is still catching up to the pace of electric mobility.

The main reason behind higher insurance premiums is the cost of electric vehicle components, particularly batteries and motors, which can make up nearly 40 per cent of a car’s total value.

If damaged, these parts are expensive and complex to repair or replace. A new battery can cost Dh60,000 to Dh80,000, and only a handful of workshops across the UAE are fully equipped to handle such repairs.

Insurers say EVs also record higher claim ratios — between 8 and 12 per cent, compared with 5 to 7 per cent for conventional vehicles — because of their intricate electrical systems and compact build. Some companies add a small “risk-loading” fee to EV policies to account for this added uncertainty and the limited availability of long-term accident data.

Electric vehicles often have single-frame bodies, meaning that even small collisions can require replacing entire sections of the car rather than just one part. That structural difference pushes repair costs higher and extends waiting times.

Workshops with the right diagnostic tools and trained staff are still limited, particularly for newer or less common EV brands. Delays are also common when spare parts have to be imported, and in some cases, owners buy components directly from abroad to avoid long waiting periods.

The shortage of authorised dealers for certain imported brands has added another layer of difficulty, as drivers face challenges sourcing certified parts and maintaining warranties.

Insurance companies are adjusting their policies to reflect these realities. Most now include battery protection clauses, covering total or partial damage caused by accidents. However, coverage usually excludes problems caused by improper charging or using non-certified home chargers.

Some providers have also started offering roadside charging assistance — a new service that helps stranded EV drivers who run out of power mid-journey.

EV policies still work much like traditional car insurance, but the differences lie in these added clauses and exclusions. Insurers advise owners to carefully read policy details, especially when it comes to battery, software, and charger coverage.

Insurance consultants say an increasing number of EV owners in the UAE are choosing third-party liability coverage instead of comprehensive insurance to save money.

According to industry figures, comprehensive insurance in the UAE can cost between Dh3,500 and Dh8,000 annually for an EV, depending on the make and model — higher than the Dh3,000 to Dh6,000 typically paid for petrol cars.

Third-party coverage is cheaper but only covers damage to other vehicles. Drivers who choose it risk paying substantial repair costs themselves if their EV is damaged, particularly since repair bills for bodywork and electronics can easily reach thousands of dirhams per incident.

Experts believe the insurance gap between electric and petrol cars will close as the local ecosystem develops. More trained repair technicians, a broader network of certified workshops, and a steady supply of spare parts will help bring costs down.

As accident and performance data accumulate, insurers will be able to set premiums more accurately, reducing the current uncertainty that drives up costs.

For now, EV ownership in the UAE remains a balancing act between sustainability and practicality. The benefits of lower fuel costs and cleaner technology are clear — but so are the higher expenses tied to repairs and insurance.

As one industry analyst put it, “Electric vehicles are the future of mobility, but today, even a small scratch can still come with a big price tag.”