Add-ons saw strong uptake, led by Roadside Assistance 74% and Zero Depreciation 60%. Engine Protector, Consumables, and Key/Lock Replacement saw moderate adoption at around 25% each
Fiscal year 2026 marked a quiet but decisive shift in how Indians insure their vehicles. Motor insurance -- long treated as a grudging, mandatory purchase -- began to look more like a risk-management product shaped by technology, usage and lifestyle. Platform-level data analysed by Policybazaar shows three forces driving the change: the rapid rise of electric vehicles, a protection-first mindset, and the mainstreaming of usage-linked policies.
EVs move from niche to premium growth engine
Electric vehicles were the standout growth story of FY26. New EV motor insurance purchases grew nearly 2.5 times year-on-year, while premiums surged around 200% -- a sharp contrast to petrol and diesel vehicles, where purchase growth stayed below 10% and premium growth around 30%.
The gap reflects more than just higher adoption. EVs carry higher average ticket sizes and distinct risk profiles -- from battery replacement costs to specialised repairs -- prompting buyers to opt for more comprehensive covers. In short, EV insurance is no longer an add-on to auto sales; it's a fast-scaling, high-value category in its own right.
From compliance to protection-first buying
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As vehicles became more expensive -- and more complex -- buyers started treating insurance as active protection, not paperwork. Add-on covers saw strong uptake across the board. Roadside Assistance led with 74% adoption, followed by Zero Depreciation at 60%. Engine Protector, Consumables, and Key/Lock Replacement each hovered around 25%, while Return to Invoice (RTI) -- a higher-cost add-on -- saw a more selective 12% uptake.
Brand-new vehicles get the most protection
The protection bias was even clearer among buyers of brand-new vehicles. Add-on attachment rates jumped sharply at the point of purchase, led by Zero Depreciation (96%) and Roadside Assistance (83%). Consumables (74%), RTI (67%), and Engine Protector (61%) followed closely.
Where demand came from -- and what people drove
Regionally, Maharashtra recorded the highest demand for motor insurance in FY26, followed by Uttar Pradesh and Delhi. The vehicle mix also shifted. SUVs dominated new-car insurance choices, reflecting consumer preference for feature-rich compact utility vehicles.
Among newly insured models, names like Tata Nexon, Mahindra XUV 3XO, Mahindra XUV700, Hyundai Creta, and Tata Punch featured prominently. Across the overall insured base, high-volume hatchbacks and compact SUVs continued to dominate, underscoring India's dual market: aspirational upgrades alongside mass mobility.
Pay-as-you-drive goes mainstream
Perhaps the most structural change came from usage-linked insurance. Pay-As-You-Drive (PAYD) moved from experimentation to meaningful adoption in FY26. Around 15-20% of customers opted for PAYD policies, declaring annual usage of 7,500-8,500 km and achieving 25-30% savings versus standard comprehensive plans.
The appeal is strongest among urban, low-mileage drivers -- households with multiple vehicles, hybrid work routines, or limited daily commutes. As telematics and self-declaration models improve, PAYD is emerging as a credible alternative to one-size-fits-all pricing.
Top vehicle models insured in 2025
2 Wheeler: Honda Activa, TVS Jupiter, Hero Splendor Plus, Royal Enfield Classic, Suzuki Access, Honda CB Shine, Honda Dio, Bajaj Pulsar 150, Hero HF Deluxe, TVS Apache.
4 Wheeler: (i) Overall: Maruti Wagon R, Maruti Baleno, Maruti Swift, Tata Nexon, Hyundai i20.These models reflect continued dominance of high-volume hatchbacks and compact SUVs
(ii) Brand New: Tata Nexon, Mahindra XUV 3XO, Mahindra XUV700, Hyundai Creta, Tata Punch. New car purchases showed a clear tilt towards SUVs and feature-rich compact vehicles.
SUVs dominated new car insurance choices throughout FY26. Customer preference continued to shift towards feature-rich SUVs and compact utility vehicles.
Data Insights: Models such as Tata Nexon, Mahindra XUV 3XO, Mahindra XUV700, Hyundai Creta, and Tata Punch featured prominently among newly insured vehicles.
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