VEHICLE INSURANCE MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2025-2032)

Vehicle Insurance Market Size and Forecast – 2025 to 2032

Global vehicle insurance market is estimated to be valued at USD 1,077.47 Bn in 2025 and is expected to reach USD 1,896.22 Bn by 2032, exhibiting a compound annual growth rate (CAGR) of 8.4% from 2025 to 2032.

Key Takeaways

• By Motor Insurance Type, Third Party hold the largest market share of 62.2% in 2025 owing to the increasing vehicle ownership & registration.
• By Application, Personal Vehicle expected to hold largest market share of 54.7% in 2025 owing to its rising vehicle ownership.
• By Vehicle Age, New Vehicle acquired the prominent market share of 77.3% in 2025 owing to the mandatory insurance requirement.
• By Distribution Channel, Banks dominates the overall market share in 2025 owing to the loan & financing protection.
• By Region, North America dominates the overall market with an estimated share of 34.8% in 2025 owing to the high vehicle ownership & vehicle miles traveled (VMT).

Market Overview

The vehicle insurance market provides coverage for personal, commercial, and new vehicles, protecting them against accidents, theft, natural disasters, and third-party liabilities. Regulatory mandates, increasing vehicle ownership, and greater awareness of financial risks drive the market’s global growth. Technological advancements, digital distribution channels, and value-added services like roadside assistance and telematics-based policies actively shape consumer preferences. Rising urbanization, vehicle financing, and the need to protect high-value assets continue to boost demand across regions.

Current Events and Its Impacts on the Vehicle Insurance Market

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Segmental Insights 

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Vehicle Insurance Market Insights, By Motor Insurance Type: Third Party contribute the highest share of the market owing to its rising road traffic & accident rates.

Third Party hold the largest market share of 62.2% in 2025. Legal requirements mandating minimum liability coverage actively drive the growth of third-party vehicle insurance. Increasing vehicle registrations and heavier traffic further heighten the need for this protection. Cost-conscious vehicle owners choose third-party policies as an affordable solution, while growing awareness of accident-related financial liabilities encourages compliance. Digital platforms streamline the purchase and renewal process, and expanding commercial fleets combined with stricter enforcement of insurance laws continue to boost demand, establishing third-party insurance as a key segment of the vehicle insurance market. For instance, in January 2025, Budget Direct Insurance, a leading digital insurer, has launched its Commercial Vehicle Insurance product to serve businesses in Singapore.

Vehicle Insurance Market Insights, By Application: Personal Vehicle contribute the highest share of the market owing to its cost-effectiveness of insurance.

Personal Vehicle expected to hold largest market share of 54.7% in 2025. Rising vehicle ownership and growing awareness of financial protection actively drive demand for personal vehicle insurance. Vehicle owners increasingly choose comprehensive coverage and add-on services to safeguard their investments. Digital platforms and insurance aggregators streamline policy purchase and renewal, making insurance more accessible. Economic growth, easy financing options, and urban lifestyles motivate more individuals to insure their vehicles. Furthermore, marketing campaigns and peer influence actively raise awareness, encouraging wider adoption of personal vehicle insurance. For instance, in June 2025, Zuno General Insurance has introduced India’s first motor insurance policy with real-time crash detection. The company has integrated this feature into its flagship Zuno Smart Drive policy, allowing the system to provide instant roadside assistance and process claims quickly during accidents—automatically, without requiring any action from the customer.

Vehicle Insurance Market Insights, By Vehicle Age: New Vehicle contribute the highest share of the market owing to its digitalization & simplified purchase

New Vehicle acquired the prominent market share of 77.3% in 2025. Mandatory coverage requirements during vehicle registration and financing actively drive demand for new vehicle insurance. Vehicle buyers increasingly choose comprehensive protection to safeguard their high-value assets against accidents, theft, and natural disasters. Dealers and financial institutions bundle insurance with vehicle purchases, facilitating seamless adoption. Advanced safety features and electric vehicle components in new cars heighten the need for specialized coverage. Moreover, growing consumer awareness of risk management and the convenience of digital platforms encourage more individuals to secure insurance for their new vehicles. For instance, in July 2025, Allianz UK has partnered with Volkswagen Financial Services UK as its new motor insurance provider. Starting 9th July, the five-year deal covers all Volkswagen Group passenger car brands in the UK, including Volkswagen, Škoda, Audi, SEAT, and CUPRA.

Vehicle Insurance Market Insights, By Distribution Channel: Banks contribute the highest share of the market owing to its risk management & portfolio security.

Banks actively drive the vehicle insurance market by requiring insurance for all financed vehicles, protecting their collateral from accidents, theft, and total loss. They promote insurance through bancassurance partnerships, earning commissions while providing customers with value-added services. Digital integration enables banks to streamline policy issuance during loan disbursement, making insurance adoption easy and convenient. By reducing credit risk and ensuring regulatory compliance, banks safeguard their financial interests and actively support the widespread growth and penetration of vehicle insurance. For instance, ICICI Lombard has launched innovative motor insurance solutions to enhance the customer experience. The company introduced the Motor Floater offer in line with IRDAI’s recent announcement.

Regional Insights

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North America Vehicle Insurance Market Trends

North America dominates the overall market with an estimated share of 34.8% in 2025. The North American vehicle insurance market is actively evolving as consumers and insurers adopt digital platforms, telematics, and usage-based insurance programs that tailor premiums to driving behavior. Consumers increasingly choose comprehensive coverage for high-value and technologically advanced vehicles, including electric and autonomous models. Rising urbanization, growing vehicle ownership, and expanding commercial fleets actively drive market demand. Greater awareness of accident, theft, and natural disaster risks motivates broader coverage, while insurers leverage data analytics to improve risk assessment and enhance customer engagement. For instance, in July 2025, American Honda Motor Co., Inc. has introduced Honda Insurance Solutions, a licensed agency that offers competitive insurance options for Honda and Acura customers. The service provides coverage for vehicles, motorcycles, RVs, homes, and more.

Asia Pacific Vehicle Insurance Market Trends

The Asia Pacific vehicle insurance market is rapidly expanding as rising vehicle ownership and urbanization drive demand across emerging economies. Consumers increasingly choose comprehensive coverage and value-added services like roadside assistance and cashless claims. Digital platforms and mobile apps actively simplify policy purchase and renewal, enhancing market penetration. Growing awareness of accident, theft, and natural disaster risks motivates wider insurance adoption. Furthermore, expanding commercial fleets, government initiatives, and regulatory reforms actively shape market trends and strengthen overall insurance coverage throughout the region. For instance, in July 2025, Zurich Kotak General Insurance has introduced EV Protect, an add-on cover under its Car Secure insurance product, tailored specifically for electric vehicles in India, including Tesla models.

United States Vehicle Insurance Market Trends

The United States vehicle insurance market continues to evolve as consumers embrace usage-based and telematics programs that tailor premiums to their driving patterns. Demand is rising for comprehensive coverage, especially for high-value, electric, and technologically advanced vehicles. Digital platforms and mobile apps simplify policy purchase, management, and claims, enhancing convenience for customers. Increasing vehicle ownership, dense urban traffic, and the growth of commercial fleets drive market demand, while heightened awareness of accidents, theft, and natural disasters encourages wider coverage and encourages insurers to use data analytics for improved risk management. For instance, in July 2025, Lemonade has launched car insurance in Indiana as it expands its auto coverage across the U.S. The insurtech aims to provide Indiana drivers with faster, more affordable, and digital-first insurance through its AI-powered platform.

India Vehicle Insurance Market Trends

The India vehicle insurance market is actively expanding as rising vehicle ownership and stricter regulatory requirements drive demand for both third-party and comprehensive coverage. Consumers increasingly choose value-added services such as roadside assistance, cashless claims, and policy renewals through digital platforms. Growing awareness of accidents, theft, and natural disaster risks motivates broader insurance adoption. Furthermore, the rapid expansion of commercial fleets, government initiatives enforcing mandatory insurance, and active partnerships between banks and insurers shape market trends and strengthen overall penetration across urban and semi-urban areas. For instance, in December 2025, Hansa Research has expanded its presence in the insurance sector by launching the nationwide Motor Insurance CuES 2025. The study focuses on 2W and 4W motor insurance, analyzing how consumers think, choose, and experience their coverage.

End-User Feedback and Unmet Needs in the Vehicle Insurance Market

• Policy Complexity and Transparency: Customers often struggle with complicated policy language, unclear terms, and hidden exclusions. Many feel unsure about what is truly covered, leading to mistrust or hesitation. Simplifying documentation, providing clear explanations, and offering visual tools or guides can address this gap and improve overall user confidence in vehicle insurance.
• Slow and Cumbersome Claim Process: End-users frequently report delays in claim approvals, inspections, and reimbursements. Lengthy procedures after accidents or theft frustrate policyholders, creating dissatisfaction. Faster processing, real-time updates, and digitized claim handling could significantly enhance user experience and reduce the stress associated with managing insurance claims.
• Limited Add-On Services: Many policyholders feel standard coverage lacks useful extras like roadside assistance, cashless repairs, or vehicle health monitoring. Consumers increasingly expect value-added features beyond basic insurance. Expanding optional services can improve satisfaction, provide convenience, and attract more tech-savvy or high-value vehicle owners seeking comprehensive support.

Vehicle Insurance Market Trend

Digital Transformation and Online Platforms

The vehicle insurance market is increasingly embracing digitalization, with insurers offering online policy purchase, renewal, and claim management. Mobile applications, AI chatbots, and self-service portals enhance convenience, speed, and customer engagement. Digital tools also allow real-time quotes, document verification, and claim tracking, reducing friction. This shift improves operational efficiency for insurers while meeting consumer expectations for seamless, tech-driven interactions. The trend is driving higher penetration in urban and semi-urban markets.

Telematics and Usage-Based Insurance (UBI)

Telematics technology and usage-based insurance programs are transforming vehicle insurance by allowing premiums to be personalized according to driving behavior. Sensors and connected devices track speed, mileage, and driving patterns, incentivizing safe driving. Insurers benefit from more accurate risk assessment, while customers gain fairer pricing. This trend is gaining traction among urban, tech-savvy consumers and fleet operators seeking to optimize costs while promoting responsible driving habits, reshaping how insurance products are designed and priced.

Vehicle Insurance Market Opportunity

Growth in Electric and Connected Vehicles

The increasing adoption of electric and connected vehicles opens opportunities for specialized insurance products. Higher vehicle value, advanced safety systems, and unique repair costs require tailored coverage. Insurers can develop policies addressing battery replacement, telematics-based monitoring, and software-related risks. By targeting eco-conscious and tech-savvy consumers, companies can differentiate offerings, foster loyalty, and establish themselves as innovators in a rapidly evolving automotive landscape, while addressing gaps in traditional insurance solutions for modern vehicles.

Market Report Scope 

Vehicle Insurance Market News

• In December 2025, Policybazaar has launched Claim Kavach, a support programme that simplifies and speeds up motor insurance claims by guiding customers from the moment they report an incident.
• In November 2025, Shory, a First.tech company and the UAE’s leading digital insurance platform, has onboarded its digital vehicle insurance renewal service on TAMM 4.0 in collaboration with the Abu Dhabi Government Services Platform.

Analyst Opinion (Expert Opinion)

• The vehicle insurance market is at a strategic inflection point where technology and risk economics are rewriting competitive advantage. Traditional underwriting models are proving increasingly brittle given today’s complex risk landscape — rising total‑loss events due to sophisticated vehicle electronics and ADAS systems have pushed the share of totalled collision vehicles to record highs, with 27% of crashes resulting in a total loss in 2023 according to industry data. This isn’t a marginal shift; it fundamentally alters reserve requirements and pricing discipline across portfolios.
• Telematics and data‑driven pricing are no longer optional — they are existential. Over 48 million connected cars globally have telematics capability now, with policyholders reporting meaningful premium reductions tied to safer behavior. Younger drivers under 35 are enrolling in usage‑based models at higher rates, and insurers are increasingly embedding telematics for fraud detection and risk segmentation. Yet this transformation brings acute data privacy risk: litigation like the Nebraska lawsuit against GM/OnStar over unauthorized data use highlights how privacy missteps directly undermine trust and could erode telematics adoption if not proactively managed.
• Digital claims and AI are redefining customer experience benchmarks. Insurers that have invested in AI‑augmented claims processing — some automating upward of 95% of claims adjudication without human intervention — are outpacing peers in speed and satisfaction. Expect customer loyalty to increasingly hinge not on price alone but on frictionless, tech‑enabled service delivery.

Market Segmentation

• Motor Insurance Type Insights (Revenue, USD Bn, 2020 - 2032)
• Own Damage  
• Third Party       
• Application Insights (Revenue, USD Bn, 2020 - 2032)
• Commercial Vehicle
• Personal Vehicle
• Vehicle Age Insights (Revenue, USD Bn, 2020 - 2032)
• New Vehicle
• Old Vehicle
• Distribution Channel Insights (Revenue, USD Bn, 2020 - 2032)
• Individual Agents
• Brokers
• Banks
• Online
• Other Distribution Channels
• Regional Insights (Revenue, USD Bn, 2020 - 2032)
• North America
• U.S.
• Canada
• Latin America
• Brazil
• Argentina
• Mexico
• Rest of Latin America
• Europe
• Germany
• U.K.
• France
• Italy
• Russia
• Rest of Europe
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• ASEAN
• Rest of Asia Pacific
• Middle East & Africa
• GCC Countries
• South Africa
• Rest of Middle East & Africa
• Key Players Insights
• People’s Insurance Company of China
• Allstate Insurance Company
• China Pacific Insurance Co.
• Allianz
• State Farm Mutual
• Tokio Marine Group
• Automobile Insurance
• Geico
• Ping An Insurance (Group) Company of China, Ltd.
• Admiral Group Plc
• Berkshire Hathaway Inc.
• State Farm
• Ping An Insurance
• Zurich AG
• AXA SA
• Assicurazioni Generali
• GEICO
• Bajaj Finserv

Sources

Primary Research interviews

• Interviews with insurance company executives, underwriters, and claims managers
• Discussions with vehicle owners and policyholders
• Conversations with regulatory authorities and industry experts

Databases

• National insurance regulatory databases
• Government transportation and vehicle registration databases
• Public insurance claim datasets

Magazines

• Automotive insurance magazines
• Fleet management and commercial vehicle magazines
• Consumer insurance publications

Journals

• Journal of Risk and Insurance
• International Journal of Insurance Studies
• Transportation and Logistics journals

Newspapers

• National and regional newspapers covering insurance and automotive sectors
• Business sections of major newspapers focusing on insurance trends
• Automotive industry news outlets

Associations

• National Insurance Associations
• Road Transport Authorities
• Motor Vehicle and Automobile Associations

Public Domain sources

• Government reports and statistics on vehicle insurance
• Industry whitepapers available publicly
• Regulatory filings and annual reports of insurance companies

Proprietary Elements

• CMI Data Analytics Tool
• Proprietary CMI Existing Repository of information for last 8 years