A single number from India’s insurance sector tells a story that the automotive industry has been building toward for years. 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 motor insurance industry. The data, drawn from the insurtech platform’s FY26 report, captures the pace at which electric vehicles are shifting from a fringe consideration to a mainstream purchase decision for Indian consumers and how the insurance market is expanding to match that shift.
The numbers on new EV insurance purchases are equally striking. New EV insurance purchases increased nearly 2.5 times year-on-year, while premium collections rose by around 200%, far outpacing growth in petrol and diesel vehicle insurance. This surge was attributed not only to higher EV adoption but also to increased average premium values linked to battery systems and advanced vehicle technologies.
“EV insurance saw explosive growth of 670% in FY26; Maharashtra leads adoption trend. According to a Policybazaar analysis, EV insurance policies surged 670% between 2025 and 2026, making it the fastest-growing segment in motor insurance.”~Business Today
Maharashtra Leads, Telangana Grows Fastest:
The geographical spread of EV insurance adoption tells its own story. 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.
The concentration of EV insurance in Maharashtra reflects the state’s relatively mature EV charging infrastructure, higher per-capita income in its major cities, and the presence of a large salaried consumer base that has been an early adopter of electric two-wheelers and cars. Pune, in particular, has seen significant EV adoption driven by both personal vehicle buyers and fleet operators.
Telangana’s 30% increase in total insured vehicles is significant because it shows that Hyderabad and the surrounding area are catching up quickly. This development is connected to the city’s expanding technology workforce and the state government’s aggressive efforts to promote EV adoption through incentives and investments in charging infrastructure.
Despite the spectacular growth, EVs currently represent just 1% of the insured base, indicating that although EV penetration remains small, growth momentum is accelerating rapidly. Petrol vehicles continue to dominate with a 68.3% share of insured vehicles, followed by diesel at 24.7% and CNG at 5.8%.
“EV Insurance Policies Surge 670% in FY26 as Tier-2, Tier-3 Markets Drive Growth. Maharashtra leads EV insurance adoption; Telangana records the highest overall growth in insured cars at 30% YoY.”~Autocar Professional
Tier-2 And Tier-3 Cities Rewrite The Insurance Growth Map:
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.
This shift fundamentally challenges the assumption that insurance penetration in India is primarily a metro phenomenon. Cities like Nashik, Coimbatore, Lucknow, Bhopal, and Surat are now driving volume growth that the four major metros simply cannot match because of their already-higher penetration levels. The fact that non-metro markets are growing nearly twice as fast as metros indicates that the second wave of India’s insurance expansion is well underway — and it is being led by rising vehicle ownership and improving digital access to insurance products in smaller towns.
The report also revealed 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. Two-wheelers, which remain the primary vehicle for a vast number of Indian households, are seeing faster insurance adoption as awareness campaigns and mandatory third-party coverage enforcement take hold.
“India’s motor insurance market is seeing strong growth driven by rising EV adoption, non-metro expansion, and increasing demand for comprehensive coverage. EV insurance is the fastest-growing segment — up 670% in FY26.”~PolicyBazaar
Add-Ons, Claims Trends, And The Road Ahead For EV Insurance:
The Policybazaar analysis provides insight into how Indian car owners are seeing insurance coverage in general, going beyond the headline growth rate. According to the survey, during the first three years of ownership, Roadside Assistance and Zero Depreciation were the most popular add-ons among car owners, with adoption rates of 89% and 87%, respectively. Roadside assistance is especially important for EV owners; the risk of a battery drain leaving a vehicle stranded without a nearby charging station makes RSA coverage a near-essential purchase rather than an optional supplement.
The report’s claims data accurately depicts Indian highways on a daily basis. Across all vehicle classifications, minor traffic accidents and damage from traffic continued to be the most frequent claims. This serves as a reminder that Indian car owners’ primary insurance risk is the same regardless of the fuel type.
Particularly for EV insurance, the premium pool being created by EV insurance growth is proportionally larger than the policy count alone indicates because of the higher premium values connected with battery replacement and repair, EV batteries can make up 40% to 60% of a vehicle’s overall cost. The motor insurance industry is about to undergo one of its biggest structural changes in decades as EV penetration rises from its current 1% of the insured base toward the government’s more expansive electrification targets. FY26’s 670% surge may be remembered as the year that the transformation really started.
