New Car Replacement Insurance Market Report 2026

The new car replacement insurance market size has grown strongly in recent years. It will grow from $4.14 billion in 2025 to $4.52 billion in 2026 at a compound annual growth rate (CAGR) of 9.2%. The growth in the historic period can be attributed to increasing new vehicle sales volumes, rising awareness of vehicle depreciation risks, expansion of comprehensive auto insurance products, growth in insured vehicle ownership, increasing role of online insurance distribution.

The new car replacement insurance market size is expected to see strong growth in the next few years. It will grow to $6.36 billion in 2030 at a compound annual growth rate (CAGR) of 8.9%. The growth in the forecast period can be attributed to growing adoption of electric and hybrid vehicles, rising demand for bundled insurance solutions, expansion of usage-based insurance models, increasing integration of ai-driven claims assessment, growing focus on premium vehicle protection. Major trends in the forecast period include increasing demand for depreciation protection coverage, rising adoption of digital insurance platforms, growing preference for customizable auto insurance policies, expansion of ev-specific replacement coverage, enhanced focus on customer-centric claims processing.

The rising sales of new cars are expected to drive the growth of the new car replacement insurance market in the coming years. New car sales refer to the number of passenger vehicles registered for the first time, reflecting consumer demand, fleet renewal, and overall economic activity in the automotive sector. Increasing registrations indicate stronger consumer confidence, improved access to financing, and higher mobility needs, all of which boost demand for insurance coverage. For example, in November 2025, according to the European Automobile Manufacturers’ Association (ACEA), a Belgium-based trade association, new car registrations in the European Union rose by 1.4% year-to-date compared with the same period the previous year, driven by higher registrations of battery-electric and hybrid vehicles. Total registrations reached 2,459,151 units year-to-date, with battery-electric vehicles up 38.6% and hybrid electric vehicles up 9.4%. Therefore, rising new car sales are fueling the growth of the new car replacement insurance market.

The increasing number of accidents is expected to drive the growth of the new car replacement insurance market in the coming years. Accidents are unforeseen events that cause damage, injury, or harm, often resulting from human error, mechanical failure, or environmental factors. The rise in accidents is largely attributed to distracted driving, which reduces attention on the road and increases the likelihood of collisions. New car replacement insurance mitigates the financial impact of accidents by providing policyholders with a full replacement vehicle, supporting safer driving habits and faster recovery after collisions. For example, in August 2025, according to the Michigan State Police, a US-based law enforcement agency, traffic crashes in Michigan increased from 287,953 in 2023 to 288,880 in 2024, while traffic-related deaths rose from 1,095 to 1,099, reflecting a year-over-year increase in serious collision incidents. Therefore, the rising number of accidents is fueling the growth of the new car replacement insurance market.

In January 2024, Aviva plc, a UK-based insurance company, acquired Optiom O2 Holdings Inc. for an undisclosed sum. Through this acquisition, Aviva intends to enhance its presence in Canada’s specialty insurance sector, particularly in vehicle replacement coverage. Optiom O2 Holdings Inc. is a Canada-based provider of new car replacement insurance.

Major companies operating in the new car replacement insurance market are AXA S.A., Allianz SE, Nationwide Mutual Insurance Company, American International Group Inc., The Allstate Corporation, Liberty Mutual Insurance Company, The Travelers Companies Inc., Aviva Plc, American Family Mutual Insurance Company S.I., MAPFRE S.A., The Hartford Financial Services Group Inc., Ameriprise Financial Inc., Assurant Inc., Erie Insurance Group, Plymouth Rock Assurance Corporation, The General Automobile Insurance Services Inc., Acuity Insurance, New Jersey Manufacturers Insurance Group, Bajaj Allianz General Insurance Company Limited, Wallace & Turner Inc.

North America was the largest region in the new car replacement insurance market in 2025. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in the new car replacement insurance market report are Asia-Pacific, South East Asia, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the new car replacement insurance market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Taiwan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

The new car replacement insurance market includes revenues earned by entities through loyalty-based replacement programs, mileage-based replacement plans, and lease-specific replacement coverage. The market value includes the value of related goods sold by the service provider or included within the service offering. Only goods and services traded between entities or sold to end consumers are included.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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