Indian car owners are steadily moving away from
one-size-fits-all motor insurance in 2026, opting instead for policies that
align with their driving habits, vehicle usage, and local conditions. This
shift is being driven by digital adoption, rising vehicle ownership, and the
growing availability of flexible policy structures.
From usage-based pricing to modular add-ons, insurers are
now offering solutions that allow customers to build coverage tailored to their
needs. As a result, motor insurance is evolving from a standard purchase into a
more personalised financial decision.
What This Means for Car Owners
For today’s drivers, this shift translates into greater
flexibility and cost efficiency. Usage-based insurance (UBI) models, such as
pay-as-you-drive and pay-how-you-drive, are gaining traction, especially among
younger drivers and urban commuters. These models link premiums to factors like
distance travelled and driving behaviour, offering potential savings for
low-mileage or safe drivers.
At the same time, add-ons are becoming a key part of
decision-making. Features like roadside assistance and zero depreciation cover
continue to see strong adoption, particularly among new car owners seeking
comprehensive protection from day one.
Different driving profiles are shaping coverage choices.
Occasional users are leaning towards mileage-based plans, while frequent
highway drivers prioritise support services like roadside assistance. Urban
commuters, on the other hand, are opting for a balanced mix of affordability
and convenience-driven add-ons.
Shubham Moondra, Chief Product Officer at Royal Sundaram
noted: “We’re seeing a clear shift as Indian drivers demand policies that
match their real-world driving patterns, from urban commutes to weekend
getaways. Usage-based models are empowering safe drivers to save up to 30% on
premiums.”
A More Personal Approach to Protection
Customisation today goes beyond basic coverage; it reflects
how and where vehicles are used. Increasingly, car owners are selecting add-ons
based on real-world risks and regional conditions.
Engine Protection is recommended for car owners in regions that
experience heavy monsoons, such as Kerala and Mumbai, as well as those in
coastal areas where water-related damage to the engine is a common risk.
Tyre Protection is suited
for drivers who frequently travel on poor roads and pothole-prone routes,
covering damage to car tyres or tubes even when the car is not involved in any
accident.
Return-to-Invoice cover is
particularly useful for car owners in urban areas, or those at higher risk of
theft, ensuring they receive the full invoice value of their vehicle in case of
a total loss.
Consumables Cover is ideal
for urban areas and should be taken along with a depreciation cover.
Personal Belongings Protection
is best suited for urban areas and theft-prone zones.
Daily Allowance is
recommended for those with heavy daily commuting needs or business use, as it
provides a daily cash benefit that helps cover alternative transport costs when
your car is in the garage for repair.
Key Replacement cover
addresses general comprehensive needs.
Emergency Medical Expenses
cover serves general comprehensive needs and is especially relevant in
situations where 24-hour hospitalisation is required for the occupants of the
car due to an accident.
Wrong Fuel Protection
covers general comprehensive needs and comes into play when your car is
accidentally filled with the wrong type of fuel.
Many buyers are also choosing their preferred insurer at the
time of vehicle purchase, ensuring seamless coverage from day one while
aligning policy features with their immediate needs.
Backed by Strong Market Growth
This move towards customisation is supported by robust
growth in India’s motor insurance sector. Valued at USD 30.7 billion in 2025,
the market is projected to reach USD 88.8 billion by 2034, driven in part by
increased demand for comprehensive and add-on-rich policies.
Rising repair costs, up by an estimated 15–20% in recent
years due to advanced vehicle technology, are also influencing buying
behaviour. Although insurance primarily covers accidental damages rather than
routine wear and tear, add-ons such as consumables coverage and
return-to-invoice help reduce out-of-pocket expenses during claims.
Digital platforms are further accelerating this shift.
Customers are increasingly comparing, customising, and purchasing policies
online, with adoption growing across both metro and emerging Tier 2 cities.
Shubham Moondra, Chief Product Officer at Royal Sundaram
noted: “With more vehicles on the road and needs varying across
geographies, from monsoon-prone regions to urban congestion, offering ample
add-ons lets customers customise and have wider coverage to fit their
individual risks and budgets, without unnecessary extras.”
Taking the Next Step
As motor insurance becomes more flexible, car owners have an
opportunity to reassess their coverage and align it with their actual usage
patterns. Choosing the right mix of base policy and add-ons can help optimise
both protection and cost, avoiding unnecessary coverage while addressing real
risks.
Insurers such as Royal
Sundaram are responding to this demand by
expanding their range of add-ons and offering modular plans that allow
customers to tailor policies to their needs. As preferences continue to evolve,
personalised motor insurance is set to become the norm, giving drivers greater
control, clarity, and confidence on the road.
