India’s electric vehicle (EV) insurance segment emerged as the fastest-growing category in the country’s motor insurance market in FY26, reflecting the rapid expansion of electric mobility and changing consumer preferences. According to a Policybazaar analysis, EV insurance policies recorded a massive 670% surge between 2025 and 2026, making it the fastest-growing segment in the industry.

The sharp rise comes amid increasing EV adoption, rising awareness around specialized insurance products, and stronger consumer confidence in electric mobility solutions. The report suggests the trend marks a broader shift in India’s vehicle ownership landscape, where EVs are steadily becoming a mainstream consideration for urban consumers.

Maharashtra leads

Maharashtra led the EV insurance boom in FY26, emerging as India’s largest market for insured electric vehicles. The report noted that Mumbai and Pune became major growth hubs and together helped Maharashtra account for 8% of insured EV cars nationwide.

The growth reflects the state’s expanding EV ecosystem, stronger charging infrastructure, and growing demand for EV-focused protection products. Insurance offerings for electric vehicles increasingly include battery-related coverage and specialized benefits designed for EV ownership.

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Motor insurance market

The broader motor insurance industry also maintained healthy momentum during FY26. The car insurance market recorded 8% year-on-year growth, driven largely by new vehicle purchases and improving awareness around financial protection.

Other segments posted even stronger gains. Two-wheeler insurance expanded by 11%, while commercial vehicle insurance grew 13% during the year, indicating broader growth across vehicle categories.

The data suggests rising mobility demand and increasing willingness among consumers to opt for insurance coverage beyond mandatory requirements.

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Tier-2 and Tier-3 cities

A major shift in FY26 came from smaller towns and cities. While metro cities reported 8% growth in insured car adoption, non-metro markets saw significantly stronger growth of 15%.

Tier-2 and Tier-3 cities now contribute 77% of India’s insured car market, up from 75% last year, highlighting deeper insurance penetration beyond India’s largest urban centres.

The trend reflects growing digital adoption, improved access to online insurance platforms, and increasing awareness among consumers in smaller markets.

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Petrol vehicles dominate

Despite the rapid EV growth story, petrol vehicles continue to dominate India’s insured vehicle mix with a 68.3% share, followed by diesel vehicles at 24.7%.

Alternative fuel categories are gradually expanding. CNG vehicles now account for 5.8%, while EVs currently represent 1% of the insured base, indicating that although EV penetration remains small, growth momentum is accelerating rapidly. LPG vehicles continue to remain a niche category with a 0.2% share.

Add-On covers

Customer preferences are also evolving beyond basic coverage. The report found that Roadside Assistance (RSA) and Zero Depreciation (ZD) emerged as the most preferred add-ons among vehicle owners during the first three years of ownership, with adoption levels of 89% and 87%, respectively.

According to Policybazaar, India’s motor insurance market is entering a more mature phase, with non-metro demand, EV-focused products, and customization emerging as key drivers of future growth.

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Published on: May 22, 2026 2:02 PM IST