Electric vehicle insurance premiums in the UAE EV are 20 to 35 per cent higher than those for conventional cars, even though overall car insurance prices have remained stable this year. According to insurance and automotive experts, this gap persists despite a stable market since early 2025.
The UAE continues to lead the Gulf region in electric and hybrid vehicle sales. In 2024, the country recorded about 24,000 units sold. The rising popularity of EVs has not translated into lower insurance costs. Instead, premiums remain elevated due to several industry-specific factors.
Experts point out that the high cost of EV batteries and motors is a major reason for the price difference. Batteries and motors can account for up to 40 per cent of an EV’s total value. Additionally, the limited availability of spare parts contributes to higher premiums. Repair workshops capable of servicing complex electrical systems are still relatively few in the UAE, which increases repair costs and insurance risk.
EVs also record higher claim ratios compared to conventional cars. Claims for electric vehicles range between 8 and 12 per cent. Conventional cars, by contrast, have claim ratios between 5 and 7 per cent. The advanced electronics and integrated body structures of EVs make repairs more expensive. Consequently, insurers pass these higher costs onto consumers through elevated premiums.
Furthermore, the insurance industry continues to adapt to the rapid growth of EV sales. As the market expands, more insurers are designing specialized policies for electric vehicles. However, the risk perception remains high. Insurers remain cautious because EV repairs require technical expertise and expensive components.
The government and automotive authorities are also encouraging EV adoption to support environmental goals. Incentives such as reduced registration fees and charging infrastructure expansion have boosted sales. Despite these incentives, insurance costs remain a barrier for some potential buyers.
Industry analysts suggest that as EV technology matures, prices for batteries and motors may fall. Increased availability of spare parts and more specialized workshops could also reduce repair costs. Over time, this may narrow the insurance gap between EVs and conventional cars.
In conclusion, while the UAE market for electric vehicles grows steadily, insurance premiums remain significantly higher than those for traditional cars. The high cost of components, specialized repairs, and higher claim ratios contribute to this trend, even amid overall market stability.
