EV Insurance Policies Surge 670% In FY26 As Tier-2, Tier-3 Markets Drive Growth

India’s motor insurance market recorded steady growth in FY26, led by rising adoption in non-metro regions and a sharp increase in electric vehicle (EV) insurance uptake, according to a new report by Policybazaar. 

The report states that insured car volumes grew 8% year-on-year during FY26, while the two-wheeler and commercial vehicle insurance segments expanded by 11% and 13%, respectively.

Non-Metro Markets Drive Insurance Growth
A major trend highlighted in the report was the growth of insurance adoption beyond metro cities. Non-metro markets recorded 15% growth in insured cars compared to 8% growth in metros, with Tier-2 and Tier-3 cities now accounting for 77% of the overall insured car market, up from 75% a year earlier.

The report attributed the trend to rising awareness and increasing digital adoption in smaller towns and cities.

EV Insurance Emerges As Fastest-Growing Segment
The report also pointed to rapid growth in EV insurance. Policies for electric vehicles rose 670% between 2025 and 2026, making EVs the fastest-growing category within the motor insurance segment.

According to the report, the surge reflects increasing EV adoption, rising awareness around sustainable mobility, and growing demand for insurance products tailored for electric vehicles.

Telangana, Maharashtra Lead Adoption Trends
Maharashtra emerged as the leading state for EV insurance adoption, with Mumbai and Pune identified as key growth centres. The state accounted for 8% of all insured EV cars in India. Telangana, meanwhile, recorded the highest growth in insured cars overall, with a 30% year-on-year increase.

Petrol vehicles continued to dominate the insured vehicle mix, accounting for 68.3% of insured vehicles in FY26. Diesel vehicles followed with a 24.7% share, while CNG vehicles contributed 5.8%. EVs accounted for 1% of the insured base, and LPG-powered vehicles represented 0.2%.

RSA, Zero Depreciation Covers Gain Popularity
The report noted that minor collision-related damage remained the most common cause of motor insurance claims in metro cities, driven by dense traffic conditions and congested urban roads. Other major causes included windshield damage, bumper scratches, water ingress-related engine damage during flooding, 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 opted for by 89% of customers, while ZD cover was chosen by 87%.

“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,” said Paras Pasricha, Head of Motor Insurance at Policybazaar.