Things To Know About Pay-As-You-Drive Motor Insurance

The car insurance industry keeps evolving to serve its customers. The move from paper-based insurance to a digital platform is a prime example of this evolution. The regulating body and the insurers work towards serving potential and existing policyholders’ needs and making their insurance experience satisfactory. The Pay As You Drive Car Insurance Policy is a recent example directed toward offering a customized car insurance policy.

A pay-as-you-drive motor cover is an assorted comprehensive insurance policy that charges the premiums based on the usage of your vehicle. The policy has two components: third-party cover and own-damage cover. Such policies are already prevalent in developed nations worldwide and are gaining momentum in India.

Pixabay/ Pexels | A pay-as-you-drive motor cover is an assorted comprehensive insurance policy that charges the premiums based on the usage of your vehicle

Third-party Insurance:

In India, insuring a vehicle is important. It is a legal requirement, and you can be penalized for not following the rules. Therefore, you must make sure to have your vehicle covered with at least a Third-party Car Insurance Policy. Such a policy covers injuries to third parties and damages to their property caused by the insured vehicle.

Comprehensive Insurance:

A Comprehensive Plan is your second option. It is a wide-ranging motor insurance policy. And it includes the law-required cover. Its advantage is that the policy offers Own Damage cover. This ensures protection against financial losses in case of damages to the insured car. Such damages can be due to calamities, fire, vandalism, etc. The policy also covers theft.

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The third-party cover is mandatory, and the premium is determined by the Insurance Regulatory and Development Authority of India as per the engine capacity. At the same time, the own-damage premium is determined by actual usage or distance driven. A telematics device, which is installed in your vehicle, monitors the utilization of the vehicle against the total number of kilometers covered as per the policy terms and conditions.

Telematics policies primarily use GPS technology to measure how a vehicle is being driven; insurers then use this information to make decisions about risk based on driving performance. This information is combined with other traditional risk factors, such as a driver’s age and where they live, to set premiums. ‘Safe’ drivers usually benefit from lower premiums than ‘less safe’ drivers. 

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Insurers will assess driving performance differently, but most will consider factors like the number of miles driven, the types of roads used, and speed and braking patterns. To buy such a policy, you must go through the standard KYC procedures and fill out the consent form when buying or renewing your existing policy. The pay-as-you-drive policies are available on the insurers’ websites, online aggregators, and other offline distribution channels.