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ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XV, Issue V, May 2026
A Study on Factors Influencing the Choice of Motor Insurance
Policies among Car Owners in Bangalore
Ragavendra Kumar M
1
, Dr. S. Thanigaimani
2
, Dr. T Aswatha Narayana
3
1
Research Scholar, Department of Commerce, Srimad Andavan Arts and Science College (Autonomous),
Affiliated to Bharathidasan University, Tiruchirappalli, TamilNadu, India
2
Assistant Professor and Research Supervisor, Department of Commerce, Srimad Andavan Arts and
Science College (Autonomous), Affiliated to Bharathidasan University, Tiruchirappalli, Tamil
Nadu, India
3
Professor and Head (UG&PG) Department of Commerce GovernmentFirst Grade College K.R Pura
Bengaluru-560036, Karnataka, India
DOI:
https://doi.org/10.51583/IJLTEMAS.2026.150500149
Received: 24 May 2026; Accepted: 29 May 2026; Published: 09 June 2026
ABSTRACT
A motor insurance policy provides an essential layer of financial security against the risks associated with a
motor vehicle, including accidents, theft, natural hazards and liability risks to third parties. As the number of
cars on the road has risen, technology has advanced, and the competition among insurance companies has grown,
there has been greater interest in the factors that affect customer choice of motor insurance policy. The present
study is an attempt to find out the important factors that affect the selection of Motor Insurance policies among
vehicle owners in Bangalore. The research design used was a descriptive research design, and the data collected
were primary data from 250 car owners who were given a structured questionnaire. A method called Exploratory
Factor Analysis (EFA) was used to look for the dimensions that underlie policy choices. The Kaiser-Meyer-
Olkin (KMO) index value was 0.894 with a significant Bartlett's Test of Sphericity, thus showing the data to be
appropriate for factor analysis. The findings showed that there were five key determinants of policy selection:
Service Quality and Claim Settlement, Premium and Cost Considerations, Company Reputation and Trust,
Policy Coverage and Benefits, and Digital Convenience. A total of 72.84 per cent of the variance was accounted
for by these five factors. Of these, the most significant factors impacting customer decisions were Service Quality
and Claim Settlement. The results indicate that policies that boast quick claims settlement, low rates, full
coverage, reliable insurance companies, and digital platforms are desirable to customers. The study offers
valuable information for insurance companies to define their strategies towards customers and to enhance the
attractiveness of their policies in a competitive market.
Keywords: Motor Insurance, Insurance Policy Choice, Car Owners, Claim Settlement, Service Quality, Digital
Insurance, Factor Analysis, Bangalore.
INTRODUCTION
Today, motor insurance is a vital part of the financial system that offers protection from potential financial losses
as a result of road accidents, theft, fire, natural disasters and third-party liability. Motor insurance is one of the
most popular insurance policies in India, as per the Motor Vehicles Act. Besides the legal obligations, motor
insurance also provides financial protection to the car owner, reducing the economic impact of an unpredictable
incident. Motor insurance product demand has grown significantly with the rising vehicle ownership rate in the
urban areas.
The Indian motor insurance industry has experienced a dramatic transformation in the last few years with the
advent of competition from insurers, technological advancements, digital distribution channels, and evolving
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customer expectations. Insurers now come with many policy types, with varying premium rates, claim settlement
processes, coverage benefits, customer service and value-added features. This means that customers have several
options to choose from when it comes to motor insurance policies. This has complicated the decision-making
process and highlighted the need for an appreciation of those factors that may affect policy choice. With
increasing incomes, urbanisation, and economic growth, there has been a considerable upsurge in the number of
private vehicles in Bangalore, one of the fastest-growing metros in India. The city has a large population base of
motorists and growing awareness of financial risk management, making it an important market for motor
insurance products. When buying an insurance policy for the first time or renewing the existing one, car owners
in Bangalore consider various factors like premium affordability, policy coverage, the reputation of the insurer,
claim settlement efficiency and the availability of digital services. These factors have implications for policy
adoption as well as customer satisfaction and loyalty with insurance companies.
Past research has showcased a number of factors that influence motor insurance purchase behaviour, such as
service quality, premium pricing, company reputation, customer trust, policy benefits and technological
convenience. However, most of the studies have studied these factors separately, and few studies have studied
the combined impact of these factors on the policy choice of Bangalore car owners. Further, the increasing use
of digital insurance services and the technology-driven customer interactions have added new dimensions that
need to be explored empirically.
The present study aims to use EFA to find the major factors affecting the selection of motor insurance policies
of car owners in Bangalore. The results will help insurance companies to get a better understanding of customer
preferences, create competitive insurance products, improve the delivery of services and improve customer
relationships. The study also enriches the existing knowledge base with empirical evidence on the salient
dimensions influencing the choice of motor insurance policy in an urban context of India.
REVIEW OF LITERATURE
The literature reviewed has emphasised the various factors that affect customers' selection of motor insurance
policies. The study conducted by M and Thanigaimani (2025) revealed that perceived behavioural control, social
influence, and consumer confidence have positive impacts on the purchase intention of motor insurance policies,
while perceived risk has a negative impact that hinders the consumer's willingness to accept the policies.
According to the Motor Insurance Policy Selection Study (2024), the factors that significantly influence the
policy selection are policy coverage, premium affordability, claim settlement efficiency, and insurer reliability.
Likewise, Legass and Seid (2024) found that insurance awareness, customer knowledge, perceived benefits and
service quality are factors that greatly affect purchase decisions. Poudel and Shrestha (2024) found that
customers' preference for comprehensive motor insurance coverage is influenced by income level, prior claim
experience, insurance awareness, and knowledge of benefits from the insurance policy. The average of Ruslan
and Rasid (2024) revealed that the perceived value, affordability and awareness of the other coverage options
have a positive impact on policy enhancement decisions. M. W. and K. N. (2024) emphasised the importance of
premium pricing, product features, service processes, service staff – consumer interaction, and distribution
accessibility in attracting motor insurance customers. Similarly, Ansah et al. (2024) found that factors such as
demographic traits, income, vehicle value, and risk perception are significant factors in insurance decisions,
while Almulhim et al. (2024) identified insurer reputation, service reliability, and customer trust as key drivers
in policy selection. Van Huyssteen and Rudansky-Kloppers (2023) found that risk attitude, perceived benefits,
premium affordability and trust are significant factors in the purchasing behaviour. According to Sharma and
Bansal (2022), policy coverage, customer service quality, claim settlement efficiency and affordability factors
are found to be the most important factors affecting customer satisfaction and policy selection. Verma and Sinha
(2022) emphasised the role of digital convenience, online transactions, quick issuance and renewal processes in
influencing the preference of the customers. Anh et al. (2021) found that motives of insurance purchase, risk
perception and attitude towards insurance benefits have a significant impact on the purchase intention. Rao and
Reddy (2020) found that the reputation of the company, financial strength, and trust of customers are factors that
influence the choice of insurance companies. In a study carried out in Bengaluru, Ghose and Akanchha (2020)
identified that comprehensive coverage, claim settlement speed, customer service, value-added features and
insurer reputation have a significant impact on the customers' choice of motor insurance companies. Parihar and
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Rahul (2019) found that speed of service, online transaction facilities, effectiveness of communication and
banking connectivity have a positive impact on insurance buying behaviour. In a previous study, Stella (2018)
noted that awareness of insurance benefits, understanding of insurance claim procedures, and positive experience
with insurance companies play an important role in the decision to purchase and renew insurance policies.
Overall, these studies show that the most significant drivers for motor insurance policy choice for a vehicle
owner are service quality and claim settlement, premium affordability, Company reputation and trust, Policy
coverage and benefits, and digital convenience.
Previous studies have explored different factors such as customer satisfaction, insurance awareness, intention to
purchase, claim settlement, affordability of premium, service quality and digital insurance services of motor
insurance, but most of the studies have examined single determinants of motor insurance buying behaviour. Past
studies have focused on a single dimension, typically on the reputation of the insurers, risk perception, customer
trust or policy advantages. Furthermore, there are only a few studies that have studied motor insurance selection
behaviour in the context of car ownership in Bangalore. The motor insurance market has evolved considerably
from small beginnings to a highly dynamic area, driven by the rapid proliferation of digital insurers, the rising
demand from customers, growing competition among insurers, and the launch of technology-driven services.
There is, however, little empirical evidence that fully captures and confirms the underlying factors that affect
the policy choice using Exploratory Factor Analysis. Hence, there is a lack of understanding of how the premium
and cost aspects, claim settlement, service quality, policy coverage, company reputation and trust, and digital
convenience influence car owners' policy selection in motor insurance in Bangalore. The present study aims to
fill this void and aims to identify the most critical dimensions affecting the customers' motor insurance purchase
decisions with the factor analysis method.
Objectives of the Study
1. To identify the factors influencing the choice of motor insurance policies among car owners in Bangalore.
2. To provide suggestions to insurance companies for improving policy attractiveness.
RESEARCH METHODOLOGY
The present study used a descriptive research design which was used to understand the factors affecting the
selection of motor insurance policies of car owners in Bangalore City. The target population included the owners
of cars, who had bought or renewed a motor insurance policy in Bangalore. The convenience sampling method
was used to select 250 respondents, a non-probability sampling method, which involves a sample that is easy to
choose and is willing to participate in the survey. Primary data was gathered by a structured questionnaire, which
consisted of statements with a five-point Likert scale ranging from strongly disagree to strongly agree. The
questionnaire was able to gather the perceptions of the respondents on motor insurance policy selection, which
were related to various aspects of motor insurance policy selection, such as service quality, premiums, reputation
of the insurer, policy benefits and digital services. The data collected was analysed using suitable statistical
methods. Descriptive statistics were used to provide a summary of the demographic information and response
patterns of the participants. Exploratory Factor Analysis (EFA) was used to discover the factors that determine
the choice of motor insurance policies. Kaiser-Meyer-Olkin (KMO) Measure of Sampling Adequacy and
Bartlett's Test of Sphericity were used to test the appropriateness of the data for factor analysis before factor
extraction. The results enabled the identification of the critical dimensions that impact the motor insurance
buying decision of the car owners in Bangalore.
RESULTS AND DISCUSSION
The data collected from the 250 motor owners of Bangalore are analysed and interpreted in the present chapter
with respect to the factors that affect their selection of motor insurance policies. Descriptive statistics and
Exploratory Factor Analysis (EFA) were used for analysing the results. The demographic profile of the
respondents is presented first, and then the results of the factor analysis are presented, which include KMO and
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Bartlett's Test, communalities, total variance explained and the rotated component matrix. The results offer clues
for the important dimensions that impact motor insurance policy selection among car owners.
Table 1 Demographic profile (N=250)
Variable
Category
Frequency
Percentage
Gender
Male
162
64.8
Gender
Female
88
35.2
Age
Below 30 Years
52
20.8
Age
31-40 Years
96
38.4
Age
41-50 Years
67
26.8
Age
Above 50 Years
35
14.0
Education
Undergraduate
74
29.6
Education
Postgraduate
128
51.2
Education
Professional
Qualification
48
19.2
Annual Income
Below ₹5 Lakhs
61
24.4
Annual Income
₹5–10 Lakhs
98
39.2
Annual Income
₹10–15 Lakhs
57
22.8
Annual Income
Above ₹15 Lakhs
34
13.6
Insurance Type
Third Party
72
28.8
Insurance Type
Comprehensive
178
71.2
Source: Primary Data
The demographic of the respondents is presented in Table 1. In terms of gender, the majority of the respondents
were male (64.8%), with females making up 35.2 percent of the sample. With respect to age, the largest group
of respondents belonged to the 31–40 years category (38.4%), followed by 41–50 years (26.8%), below 30 years
(20.8%), and above 50 years (14.0%). In terms of educational qualification, over half of the respondents (51.2%)
were postgraduates, 29.6% were undergraduates, and 19.2% had professional qualifications. As for their annual
income, 39.2 per cent said their income ranged between Rs 5-10 lakhs, 24.4 per cent said their income was less
than Rs 5 lakhs, 22.8 per cent said their income was between Rs 10-15 lakhs, and 13.6 per cent said their income
was more than Rs 15 lakhs per year. It also reveals that most of the respondents (71.2%) had opted for a
comprehensive motor insurance policy, while 28.8 per cent had gone for a third-party motor insurance policy.
TABLE 2: KMO AND BARTLETT'S TEST
KMO and Bartlett's Test
Value
Kaiser-Meyer-Olkin Measure of Sampling
Adequacy
0.894
Bartlett's Test Approx. Chi-Square
5842.716
df
190
Sig.
<0.001
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The KMO value of 0.894 is a very good sampling adequacy value, which means the data are appropriate for
factor analysis. With Bartlett's Test of Sphericity, the chi-square value was found to be 5842.716 and statistically
significant at the 1 percent level (p < 0.001), implying that there were enough correlations among the variables.
Hence, EFA was applied to the data set because it was found to be suitable for the application. The dataset was
therefore found to be suitable for the application of Exploratory Factor Analysis.
TABLE 3: Communalities
Variable
Initial
Extraction
SQ1
1.000
0.854
SQ2
1.000
0.878
SQ3
1.000
0.861
SQ4
1.000
0.843
PC1
1.000
0.812
PC2
1.000
0.831
PC3
1.000
0.799
PC4
1.000
0.784
RT1
1.000
0.892
RT2
1.000
0.865
RT3
1.000
0.847
RT4
1.000
0.823
CB1
1.000
0.821
CB2
1.000
0.804
CB3
1.000
0.776
CB4
1.000
0.711
DC1
1.000
0.765
DC2
1.000
0.782
DC3
1.000
0.796
DC4
1.000
0.758
The Communalities are Relative to the Amount of Variance in Each Variable Accounted for by the Factors
Extracted. The Extraction Values Ranged From 0.711 to 0.892, Which is Higher Than the Recommended
Extraction Value of 0.50. This Means That Each Variable Has Some Value to Clarify the Factor Structure, and
That the Extracted Factors are a Good Representation of These Variables. The High Communality Value Shows
That the Selected Variables are Able to Capture the Underlying Dimensions Influencing Motor Insurance Policy
Choice Well.
TABLE 4: TOTAL VARIANCE EXPLAINED
Component
Eigenvalue
% Variance
Cumulative %
1
6.248
31.242
31.242
2
2.861
14.304
45.546
3
2.145
10.726
56.272
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4
1.864
9.319
65.591
5
1.45
7.25
72.841
Extracted From the Data. These Five Factors Explain 72.841 Per Cent of the Total Variance, Which is More
Than the Minimum Required for Factor Analysis. The First Factor Alone Accounts for 31.242% of the Variance,
Which Means That This Factor Plays the Most Dominant Role in Motor Insurance Policy Selection. The
Extracted Factor Structure Encompasses the Respondents' Perception of Motor Insurance Policies, and the
Cumulative Variance Explained Corroborates This.
TABLE 5: ROTATED COMPONENT MATRIX
Variable
Factor1
Factor2
Factor4
SQ1
0.884
SQ2
0.867
SQ3
0.842
SQ4
0.824
PC1
0.861
PC2
0.843
PC3
0.815
PC4
0.792
RT1
RT2
RT3
RT4
CB1
0.847
CB2
0.826
CB3
0.801
CB4
0.774
DC1
DC2
DC3
DC4
The rotated component matrix shows a clear and meaningful factor structure. The items had strong loadings on
the corresponding factors, ranging from 0.724 to 0.884. There was no significant correlation between any two
factors, which shows good discriminant validity. The results are shown to indicate that the factors identified are
independent and comprehensively cover the primary dimensions affecting car owners' selection of motor
insurance policy in Bangalore.
TABLE 6. Factor Names
Factor
Variables
Factor Name
Factor 1
SQ1-SQ4
Service Quality and Claim Settlement
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Factor 2
PC1-PC4
Premium and Cost Considerations
Factor 3
RT1-RT4
Company Reputation and Trust
Factor 4
CB1-CB4
Policy Coverage and Benefits
Factor 5
DC1-DC4
Digital Convenience
Factor 1: Service Quality and Claim Settlement emerged as the most influential factor. Respondents placed
significant importance on efficient claim processing, prompt customer service, transparency, and responsiveness
while selecting motor insurance policies.
Factor 2: Premium and Cost Considerations reflects the importance of affordable premium rates, value for
money, flexible payment options, and cost effectiveness in policy selection.
Factor 3: Company Reputation and Trust highlight the role of insurer credibility, financial strength, market
reputation, and customer trust in influencing purchasing decisions.
Factor 4: Policy Coverage and Benefits indicates that customers prefer policies offering comprehensive
coverage, add-on benefits, personal accident protection, and roadside assistance services.
Factor 5: Digital Convenience represents the growing importance of online policy purchase, digital claim
tracking, mobile applications, and online renewal facilities in influencing customer preferences.
MAJOR FINDINGS
1. The value of KMO (0.892) also indicates the sampling is appropriate for factor analysis.
2. The five factors account for 72.84% of the total variance in the selection of motor insurance policies.
3. Service Quality and Claim Settlement was the most influential factors with 26.72% variance.
4. The price of a product or service is a critical determinant in customer purchasing decisions.
5. Customers will like policies that provide more coverage and extras.
6. Digital service is impacting policy decisions more and more, e.g. claim tracking, online renewal.
Suggestions
Insurers need to pay attention to efficiency in claim settlement and minimise claim processing time. Competitive
premium pricing doesn't need to be detrimental to policy benefits. Insurers need to do a better job of
communicating and give consumers services that they can rely on and trust, and thus do a better job of improving
their brand image. To enhance their satisfaction, other value-added features and customised policy options
should be added. Furthermore, insurers must pay attention to improving their investment in digital platforms and
mobile apps to improve the policy purchase, renewal and claims management process. The awareness
programmes can also be conducted to the customers to educate them about the policy coverage options and
benefits of the policy.
CONCLUSION
Based on the study, the factors that influenced the selection of Motor insurance policy among the car owners in
Bangalore include Service Quality and Claim Settlement, Premium and Cost Considerations, Company
Reputation and Trust, Policy Coverage and Benefits and Digital Convenience. This comprised service quality
and efficiency of claim settlement. The results show that today's customers are looking for lower insurance costs
as well as reliability, full coverage, trustworthiness and technology-based services. But it is important that
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insurers shift their strategy, customer service, and move towards digital technologies to meet customer needs
and expectations, and to remain on the cutting edge in a continually evolving motor insurance market.
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