India’s motor insurance sector witnessed remarkable growth in FY26, driven by rising vehicle ownership, increasing digital adoption, and growing awareness of financial protection. A new industry report revealed that EV insurance jumps 670% year-on-year, making it the fastest-growing segment in the country’s motor insurance market.
Non-Metro India Emerges as the Growth Engine
One of the biggest trends highlighted in the report is the growing contribution of Tier-II and Tier-III cities. These smaller cities accounted for 77% of the overall insured car market in FY26, up from 75% in the previous year.
Insured car adoption in non-metro regions grew by 15% year-on-year, significantly higher than the 8% growth recorded in metro cities. The findings indicate that motor insurance demand is no longer concentrated in major urban centers. Instead, smaller cities are becoming key contributors as vehicle ownership expands and internet accessibility improves.
The shift is also being supported by easier online policy renewals, better awareness of insurance benefits, and a growing number of first-time vehicle owners seeking financial protection.
EV Insurance Becomes the Fastest-Growing Segment
The standout finding of the report is that EV insurance jumps 670% between FY25 and FY26. The sharp rise reflects the growing popularity of electric vehicles and increased awareness about the need for specialized insurance coverage.
Unlike traditional vehicle insurance, EV policies often include protection for batteries, charging equipment, and specialized repair requirements. As a result, insurers are introducing more customized products tailored to electric vehicle owners.
Maharashtra emerged as the leading state for EV insurance adoption, with Mumbai and Pune serving as major growth centers. The state accounted for 8% of all insured EV cars in the country. Meanwhile, Telangana recorded the fastest overall growth in insured cars, with a 30% year-on-year increase.
Vehicle Categories Continue to Expand
The report also recorded healthy growth across various vehicle segments:
- The car insurance market grew by 8%
- Two-wheeler insurance increased by 11%
- Commercial vehicle insurance rose by 13%
Although EV insurance jumps 670%, electric vehicles still represent only 1% of the insured vehicle base. Petrol vehicles continue to dominate with a 68.3% share, followed by diesel vehicles at 24.7% and CNG vehicles at 5.8%.
Common Insurance Claims and Popular Add-Ons
Minor collisions remain the leading cause of motor insurance claims, particularly in metro cities. Other common claims include windshield damage, bumper scratches, flood-related engine damage, and accidental parking incidents.
To reduce repair expenses, customers are increasingly opting for add-on covers. Roadside Assistance (RSA) was chosen by 89% of policyholders, while Zero Depreciation (ZD) cover was selected by 87%. Other popular add-ons included Consumables Cover (42%), Key Loss Replacement (39%), Engine Protection (36%), and Return-to-Invoice Cover (20%).
As electric mobility gains momentum and smaller cities continue to drive demand, EV insurance jumps 670%, highlighting a major shift in India’s evolving motor insurance landscape.
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