How Indian Drivers Are Customising Car Insurance Policies

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.