In India, car insurance has traditionally been uniform, mandating at least third-party coverage, regardless of how often a car was driven. Only recently, adding own damage insurance to your policy incurred additional costs without considering the frequency of car usage. However, recent years have seen advancements in car insurance, allowing car owners to customise their policies, especially own-damage coverage, to align with their driving habits. The introduction of personalised plans, like the “Pay As You Drive” motor insurance policy, caters to varying levels of risk based on driving patterns. Let’s explore this customised policy further. *
Pay-as-you-go insurance is a hybrid policy covering own damage (OD) and third party (TP). It calculates the OD premium based on your estimated mileage over a specific timeframe, while the TP premium is determined conventionally. It is usually available as an add-on from insurers.
There are two primary variants of ‘Pay As You Drive’ policies: one based on kilometres driven and the other on the policy’s duration. Kilometre-based plans begin at least 2,500 kilometres per year and offer different slabs like 5,000, 7,500, 10,000, etc. To monitor usage, insurers often employ a mobile app or a tracking device in your vehicle.
‘Switch On/Off’ motor insurance is a variation of the “Pay As You Drive” policy that allows you to activate your own damage coverage when driving and deactivate it when your vehicle is not in use. Claims are subject to terms and conditions set forth under the motor insurance policy. *
The core concept behind pay-as-you-go insurance is that driving less should lower insurance premiums. If you anticipate reduced vehicle usage throughout the year, you can pay your premium based on your actual usage rather than a fixed rate. Premiums for Pay As You Drive policies are more cost-effective than standard car insurance, although pricing may vary among insurers. You can use a car insurance calculator to estimate the cost of the premiums that need to be paid. ##
Who Needs ‘Pay As You Drive’ Insurance?
- People who work from home and rarely use their cars. Using a “Pay As You Drive” car insurance policy, they can reduce premium costs.
- “Pay As You Drive” insurance is designed for people who rely primarily on company-provided or public transportation to get to and from work and use their cars only occasionally.
- Seniors or retirees who only occasionally use cars can choose “Pay As You Drive” insurance.
- “Pay As You Drive” is made for people such as homemakers who only occasionally drive their cars.
- Those who own multiple vehicles but only drive one of them frequently may opt for “Pay As You Drive” insurance for the other cars.
- Those who reside in tier-III cities and beyond and whose annual car mileage averages less than 10,000 kilometres should choose the Pay As You Drive cover.
- Anyone who drives less than 35 miles per day may choose “Pay As You Drive” insurance.
*Standard T&C Apply
##All savings are provided by the insurer as per the IRDAI-approved insurance plan. Standard T&C apply
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.