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Two-wheeler insurance market sees major shift towards Tier-3 cities
As reliance on two-wheelers grows in rural areas, comprehensive insurance options gain traction among consumers.
The report highlights that comprehensive two-wheeler insurance is the preferred choice for 57% of buyers, overshadowing the 43% who opt for third-party coverage. (Image source: Unsplash)
In a notable shift in the two-wheeler insurance market, a recent report from Policybazaar reveals that nearly half of all insurance purchases now originate from tier-3 cities. This trend underscores the increasing dependence on two-wheelers as the primary mode of transport in rural and semi-urban regions. While tier-2 cities contribute 27% and tier-1 cities account for 24% of purchases, the dominance of tier-3 cities is a clear indication of changing consumer behaviour.
The report highlights that comprehensive two-wheeler insurance is the preferred choice for 57% of buyers, overshadowing the 43% who opt for third-party coverage. This growing preference reflects a heightened demand for protection against accidents, theft, and natural disasters, with year-on-year growth in comprehensive insurance adoption reaching 8-10%.
Increased awareness of the benefits of comprehensive coverage is driving this trend, suggesting a shift in consumer priorities towards more robust protection.
Among the various add-on options, the zero depreciation cover stands out as the most popular choice, selected by 78% of consumers. Additionally, 19% opt for compulsory personal accident (CPA) coverage, while 18% choose roadside assistance. Notably, interest in battery cover add-ons for electric vehicles (EVs) is also on the rise, indicating an evolving market landscape.
When it comes to vehicle types, motorbikes dominate the insurance purchases, accounting for 70% of total sales. The 150-220 CC segment emerges as the most common, while high-end bikes are becoming an increasingly popular niche, representing 7.4% of sales as owners seek comprehensive coverage to safeguard their investments.
Manas Kapoor, Head of Two-Wheeler Insurance at Policybazaar, commented on these findings, saying, "We're seeing a shift in how people, especially in smaller towns, approach two-wheeler insurance. With nearly half of all purchases coming from tier-3 cities, it's clear that two-wheelers are essential for daily commuting. What's interesting is the growing preference for comprehensive coverage-people are no longer just settling for third-party insurance. They're looking for more protection, whether it's against accident theft, or even natural disasters like floods. The popularity of the zero depreciation add-on shows how much consumers value reducing their repair costs and protecting their investments."
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