Vehicle Insurance Market Size, Share, and Trends 2025 to 2034

Vehicle Insurance Market Size and Forecast 2025 to 2034

The global vehicle insurance market size accounted for USD 910.51 billion in 2024 and is expected to exceed around USD 1,796.61 billion by 2034, growing at a CAGR of 7.03% from 2025 to 2034. The beneficial features of vehicle insurance, such as offering peace of mind, financial protection, compliance with the law, and protection against liabilities, are accelerating the success of the vehicle insurance market.

Vehicle Insurance Market Key Takeaways

• North America led the global market with the highest market share of 34% in 2024.
• Asia Pacific region is estimated to expand the fastest CAGR between 2025 and 2034.
• By Coverage, the third party liability segment has held the largest market share of 69% in 2024.
• By Application, the personal vehicle segment captured the biggest revenue share in 2024.

Role of Artificial Intelligence in the Vehicle Insurance Market

Artificial intelligence allows insurance companies to incorporate speed, accuracy, and customer-centric performance in their workflows, which are dedicated to providing insurance coverage plans to all vehicles. AI helps to enhance the efficiency and accuracy of industrial performances. AI can also detect fraud cases which improves customer satisfaction. AI helps insurers to streamline their business operations and provides better services to their customers. AI technology handles insurance claim processes, making them faster, more accurate, and highly efficient. With the help of AI, automated claim processing helps to reduce operational costs, improve accuracy, and speed up claims processing through immediate claim approvals, fewer errors, and a transparent process. 

U.S. Vehicle Insurance Market Size and Growth 2025 to 2034

The U.S. vehicle insurance market size was exhibited at USD 217.51 billion in 2024 and is projected to be worth around USD 436.75 billion by 2034, growing at a CAGR of 7.22% from 2025 to 2034.

North America dominated the global vehicle insurance market in 2024. The presence of leading insurance providers, increased consumer awareness regarding the benefits of vehicle insurance, high disposable income, higher demand for vehicles, and rising affordability of the middle class is boosting the growth of the North America vehicle insurance market. The rising consumer awareness regarding the benefits of electric vehicles is anticipated to boost the demand for the EVs in the upcoming years and hence the demand for the vehicle insurance is expected to rise significantly in North America. The penetration of insurance sector is significantly high in the developed market of US and Canada. The rising adoption of the digital platforms for buying and renewing vehicle insurance policies is playing a significant role in the growth of the North America vehicle insurance market. Furthermore, the rising technological advancements and growing adoption of the digital technologies among the insurance providers is expected to have a positive effect on the growth of the vehicle insurance market during the forecast period.

Asia Pacific is expected to be the fastest-growing market during the forecast period. The rising demand for the vehicles owing to rising economic activities, increasing government investments in the infrastructural development, and rapid urbanization. The presence of huge population and rising middle class is fueling the demand for the vehicles in the region. The mandatory government regulations regarding the adoption of vehicle insurance in nation like India is exponentially contributing to the growth of the Asia Pacific vehicle insurance market. The rapidly rising demand for the alternative fuel vehicles in the developing nation like China is boosting the vehicle insurance market growth. China is the largest producer and consumer of the electric vehicles in the globe.

Market Overview

Vehicle insurance refers to compliance with laws that offer financial assistance to the people who are injured and vehicles that are damaged. It covers a financial amount that can be provided to concerned people in the form of compensation. It considers various factors such as the type of vehicle under driving, the age and gender of drivers, the driving history of people, the locations of accidents, and the amount of coverage chosen by people. Several insurance coverages including third-party liability insurance, own damage insurance, comprehensive damage insurance, and collision insurance drive the vehicle insurance market. These exclusive benefits are given for two-wheelers, three-wheelers, and four-wheelers which boosts the demand for vehicle insurance premiums or coverage plans to protect the vehicles and achieve personal safety. Allianz, Geico, American International Group, Bajaj Allianz Car Insurance, etc. are leading industries in the market contributing to upscale vehicle protection facilities by protecting people too. 

Vehicle Insurance Market Growth Factors

• The vehicle insurance market is growing at a steady rate owing to rising consumer affordability, growing demand for personal mobility solutions, rising disposable income, improved standards of living, and the rise of the middle class.
• Furthermore, the rising economic activities across developing and developed nations are boosting the demand for commercial vehicles.
• The rapid growth of the e-commerce industry across the globe has significantly boosted the demand for transportation solutions which has significantly driven the demand for commercial vehicles across the globe. 
• The rising adoption of personal and commercial vehicles across the globe is expected to boost the demand for vehicle insurance during the forecast period. 
• In several countries, buying a vehicle insurance policy is a regulatory mandate. Therefore, the regulatory guidelines regarding the purchase of vehicles play a major role in the growth of the vehicle insurance market. 
• Moreover, the rising cases of road traffic accidents across the globe have led to the adoption of vehicle insurance. 
• The vehicle insurances provide financial protection the vehicle owners against physical damages due to accidents and auto theft.
• The rapidly growing popularity of ride-sharing is boosting the insurance premium growth significantly.
• A rapid rise in online cab services across the globe has significantly fostered the sales of commercial vehicles.
• Furthermore, the growing popularity and rising demand for electric vehicles across the globe is expected to boost the growth of the vehicle insurance market. 
• The adoption of the latest technologies such as artificial intelligence, the internet of things, and big data analytics is creating a digital ecosystem for the vehicle insurance industry. 
• The rapid emergence of online insurance sellers and aggregators is positively boosting the sales of various types of vehicle insurance.

Market Scope

Market Dynamics 

Driver

The contribution of insurance professionals in identifying, measuring, and managing risks for insurers selling the coverage is driving the growth of the vehicle insurance market. The online insurance retailing websites and the insurance brokers or agents are able to get quotations from multiple car insurance companies. Digital insurance facilities provide comprehensive coverage at lower costs than insurance sold through traditional approaches. 

Restraint

A lack of awareness about motor insurance is seen beyond metropolitan cities and most of the vehicles are uncovered. People who prefer to go in person to pay insurance or related processing are facing challenges due to the digital shift of insurance companies. A digital shift in insurance companies raises the need to educate people in semi-urban or rural areas to achieve expanded reach and awareness.  

Opportunity

The motor insurance companies are striving best to standardize motor insurance policies for improving clarity and customer confidence. “Use and File Framework” is an initiative that encourages insurers to experiment with newly launched products and technologies to develop motor insurance solutions such as “pay-as-you-drive” or pay-as-you-go”. Moreover, telematics and data analytics platforms are playing significant roles in growing smart insurance policies to redefine risk assessment, policy delivery, and pricing. 

Coverage Insights

Based on the coverage, the third party liability coverage segment dominated the global vehicle insurance market in 2024. The major benefits of this coverage type is that it compensates any damage caused to the third party like disability, death, or any loss to his/her property. The legal and financial care is taken care in case of third party liability coverage. The probability of the vehicle accidents and damage to the third party is a major reason behind the increased preference for the third party liability coverage insurance.

On the other hand, the comprehensive coverage is anticipated to be the fastest-growing segment during the forecast period. The comprehensive policy not only covers the third party damages but also the damages caused to the customers’ vehicles. This is a major benefit of the comprehensive insurance over the third party insurance coverage, which is propelling the demand for the comprehensive coverage across the globe.

Application Insights

Based on the application, the personal vehicle segment dominated the global vehicle insurance market in 2024. The huge number of personal vehicles across the globe has led to the increased demand for the vehicle insurance. The rising affordability owing to the easy financing and EMI options is further fueling the demand for the personal vehicles and consequently the demand for the vehicle insurance is also growing. The rapidly growing popularity of the electric vehicles is expected have a significant impact on the growth of the global vehicle insurance market in the forthcoming years.

The commercial segment is anticipated to witness the highest growth rate during the forecast period. The growing adoption of car rental services and online cab services, along with the growing adoption of electric public transport vehicles is boosting the growth of the commercial vehicles segment. Furthermore, the rising economic development and economic growth owing to rapid industrialization and growing number of economic activities in the developing and underdeveloped regions is significantly boosting the demand for the commercial vehicles and hence it is expected to boost the growth of the vehicle insurance market during the forecast period.

Vehicle Insurance Market Companies

• 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.

Recent Developments 

• In November 2024, Bajaj Allianz reported that the Usage-Based Insurance (UBI) is expected to rise over the year 2024-25 due to the high adoption of telematics technology by insurers to monitor driver behavior and provide personalized premiums. The company also reported that insurance products designed for electric vehicles are expected to grow due to the expansion of electric vehicles over 2024-25. 
• In December 2024, Bajaj Allianz launched innovative motor insurance add-ons for enhanced coverage which includes Eco Assure to deliver repair protection and named driver cover which is designed for people owning one or multiple cars driven by specific people. 

Segments Covered in the Report

By Coverage

• Third Party Liability
• Comprehensive

By Application

• Personal Vehicle
• Commercial Vehicle

By Distribution Channel

• Insurance Agents/Brokers
• Direct Response
• Banks
• Others

By Vehicle Type

• New Vehicles
• Used Vehicles

By Geography

• North America
• U.S.
• Canada
• Europe
• U.K.
• Germany
• France
• Asia-Pacific
• China
• India
• Japan
• South Korea
• Malaysia
• Philippines
• Latin America
• Brazil
• Rest of Latin America
• Middle East & Africa (MEA)
• GCC
• North Africa
• South Africa
• Rest of the Middle East & Africa