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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.
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."
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.
| Cover | Suggested For |
|---|---|
| Engine Protection | Heavy monsoons (e.g., Kerala, Mumbai and car owners in coastal areas); water-related damage |
| Tyre Protection | damage to Car Tyre(s) / Tube(s) without Car getting involved in any accident |
| Return-to-Invoice | Urban areas, theft/Flood-prone zones |
| Consumables Cover | Urban areas, theft-prone zones to be taken along with depreciation cover |
| Personal Belongings Protection | Urban areas, theft-prone zones |
| Daily Allowance | Heavy daily commuting or business use/Helps when your car is in garage for repair |
| Key Replacement | General comprehensive needs |
| Emergency Medical Expenses | General comprehensive needs / covers when 24 hours hospitalisation is required for occupants of the car due to an accident |
| Wrong Fuel Protection | General comprehensive needs / Covers when your can filled with wrong 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.
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."
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.
