186
/
2
Min Read
India’s motor insurance market recorded steady growth during FY26, driven by rising insurance awareness in non-metro cities and rapidly increasing demand for electric vehicle (EV) insurance, according to a new report by Policybazaar. The report revealed that insured car volumes grew 8% year-on-year in FY26, while the two-wheeler and commercial vehicle insurance segments expanded by 11% and 13%, respectively.
The report highlighted that motor insurance growth is no longer limited to metro cities. Non-metro markets registered 15% growth in insured cars compared to 8% growth in metros. Tier-2 and Tier-3 cities now account for 77% of the overall insured car market, up from 75% a year earlier. According to the report, increasing digital adoption and rising insurance awareness in smaller towns have significantly contributed to this trend.
Electric vehicle insurance emerged as the fastest-growing segment during FY26. EV insurance policies surged by 670% between 2025 and 2026, reflecting accelerating EV adoption, growing awareness around sustainable mobility, and rising demand for EV-focused insurance products.
Among states, Maharashtra led EV insurance adoption, with Mumbai and Pune emerging as major growth centres. The state accounted for 8% of all insured EV cars in India. Telangana, meanwhile, recorded the highest overall growth in insured cars, registering a 30% year-on-year increase.
Petrol vehicles continued to dominate the insured vehicle mix in FY26 with a 68.3% share, followed by diesel vehicles at 24.7%. CNG vehicles contributed 5.8%, while EVs accounted for 1% and LPG-powered vehicles represented 0.2% of the insured base.
The report also noted that minor road accidents and traffic-related damage remained the leading causes of motor insurance claims in metro cities. Other major causes included windshield damage, bumper scratches, flood-related engine damage, and parking-related incidents.
Among insurance add-ons, Roadside Assistance (RSA) and Zero Depreciation (ZD) cover emerged as the most preferred options among customers during the first three years of vehicle ownership. RSA cover was chosen by 89% of customers, while 87% opted for ZD cover.
Paras Pasricha, Head of Motor Insurance at Policybazaar, said, “India’s motor insurance market is entering a more mature and consumer-aware phase. The strongest momentum is now emerging from non-metro India, EV-focused insurance needs, long-term comprehensive plans, and add-on-driven customisation.”
