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India’s motor insurance market underwent a significant transformation in FY26, driven by the rapid adoption of electric vehicles (EVs), evolving consumer preferences, and the growing acceptance of usage-based insurance models. These insights were highlighted in the FY26 Motor Insurance Trends Report released by Policybazaar, based on an analysis of customer behaviour and policy data across vehicle segments.
According to the report, electric vehicles emerged as the fastest-growing segment within motor insurance during FY26. New EV insurance purchases increased nearly 2.5 times year-on-year, while premium collections rose by around 200%, far outpacing growth in petrol and diesel vehicle insurance. This surge was attributed not only to higher EV adoption but also to increased average premium values linked to battery systems and advanced vehicle technologies.
The report also pointed to a clear shift in consumer behaviour, with buyers increasingly viewing motor insurance as a risk protection tool rather than a regulatory requirement. Add-on covers witnessed strong traction, led by Roadside Assistance and Zero Depreciation. Covers such as Engine Protector, Consumables, and Key or Lock Replacement saw moderate adoption, while Return to Invoice remained a niche choice.
This protection-focused approach was particularly prominent among buyers of new vehicles, who showed significantly higher attachment rates for add-on covers at the time of policy purchase.
On the regional front, Maharashtra recorded the highest demand for motor insurance in FY26, followed by Uttar Pradesh and Delhi, together accounting for a substantial share of policy purchases during the year.
In terms of vehicle preferences, SUVs dominated new car insurance purchases, with a sustained shift toward compact and mid-size SUVs featuring higher levels of equipment. At the same time, high-volume hatchbacks continued to represent a large portion of India’s insured vehicle base. In the two-wheeler segment, commuter motorcycles and scooters remained the primary contributors to insurance volumes.
FY26 also saw rising adoption of usage-linked insurance products such as Pay-As-You-Drive policies. An estimated 15–20% of customers opted for these plans, particularly urban drivers with lower annual mileage. These users typically clocked 7,500–8,500 km per year and achieved savings of 25–30% compared to standard comprehensive policies.
Policybazaar report concludes that FY26 marks a turning point for India’s motor insurance sector. The combined impact of rising EV penetration, increased demand for add-on covers, data-driven underwriting, and usage-based pricing is reshaping product design and consumer expectations. This shift from compliance-led purchasing to personalised risk protection is expected to deepen further as mobility patterns and vehicle technologies continue to evolve
