Tier-2 And Tier-3 Cities Show Strong Surge In Buying Motor Insurance Online

Three years ago, buying motor insurance online might not have been a common dinner table talk in small-town India. But today, Tier-2 and Tier-3 cities are rewriting this narrative by leading a surge in digital adoption as they increasingly buy online motor insurance.

The numbers tell the story. According to the latest Policybazaar.com report, while metro cities continue their steady reliance on online platforms with a 35 per cent growth, it’s the smaller towns that are making news. Tier-2 cities like Pune and Lucknow have grown by 70 per cent, fueled by better internet access and rising digital literacy. Tier-3 cities and rural areas have outpaced everyone with a remarkable 11- per cent growth.

The change is not accidental, the report notes that insurers are actively invested in outreach programs, simplified online experiences, and affordable offerings all centered toward digital adoption.

Cities Driving Online Motor Insurance Sales

Delhi continues to dominate the online insurance space, accounting for 8.1 per cent of the market, followed by Bangalore and Mumbai at 4.4 per cent and 2.1 per cent respectively. But these figures are no longer the whole story.

Emerging hubs like Lucknow and Pune, with a 1.9 per cent market share each are showing a broader shift in who is driving the digital motor insurance market forward.

Car and Policies: What is Driving the Shift

Online motor insurance is not just about where, it is also about what. The data finds that certain car models dominate the online insurance space, reflecting their popularity among digitally active customers.

- Maruti dominates the list of top-insured car models, with the Wagon R and Swift sharing the top spot at 5.9 per cent.

- Hyundai’s i20 and Maruti’s Baleno follow closely, showing that whether it’s affordability or a touch of premium, digitally-savvy buyers know their options.

And it’s not just internal combustion engine (ICE) vehicles getting all the love.

The Electric Surge

The report finds that the online insurance market is riding on an electric surge. EV policies grew by a staggering 423 per cent in 2022 and a still-impressive 399 per cent in 2023, making them the fastest segment.

These numbers also reflect India’s shifting priorities. EV buyers, often younger and more eco-conscious, are finding online platforms a natural extension of their tech-first approach. Tailored EV policies, covering battery replacements and other unique needs are a big part of this success.

Age-wise Trends In Online Buyers

The rise of online insurance is being driven largely by young customers. Unsurprisingly, those aged between 25-40, the quintessential tech-savvy millennials and Gen Z, are tilted more towards adopting EVs.

But older age groups (those above the age group of 40) are not far behind, highlighting a growing comfort with digital financial tools across generations.

This surge in digital adoption is not just about convenience but also an ongoing shift in how India interacts with financial services. Tier-2 and Tier-3 cities, once considered peripheral, are becoming the center of action. Electric vehicles are setting the stage for a new era of sustainable mobility. Online motor insurance isn’t just growing, taking India along for the ride.