‘Pay as you use’ is our telematics based car insurance plan that helps you insure your car at really affordable prices depending on your usage of Km in a year. “Pay as you drive” is a new concept that was introduced in India recently and its success of it is yet to be determined.
This product was introduced in the market as per the Sandbox regulations of IRDA for 1 year, the continuity of the product will be reviewed after the trial period by IRDA. It is easy to buy a Car but difficult to maintain it is the word that can be heard by almost everyone. This is due to the maintenance costs associated with the car such as insurance, service costs, etc.
Out of this insurance cost of the vehicle could be quite high during the first 5 years age of the car due to add-ons etc., As per the Motor Vehicle Act, 1988 it is compulsory for your car to have valid third party insurance, while the own damage insurance can be taken depending upon the affordability and need of the insured.
Table of Contents:
What is “Pay as You Drive” Car insurance?
“Pay as you drive” car insurance policy is a part of the comprehensive car insurance policy wherein the own damage cover can be chosen based on usage of the car. You need to declare and select the number of kilometers you expect to drive your car and pay the premium for the same which would be calculated using a pre-determined formula.
- Low Premiums based on the kilometers values are 2500 km, 5000 km, and 7500 km
- Customizable coverage options
- Free telematics device that helps you keep track of your car
- IRDAI supported car insurance policy
- Own damage and the third party are covered in this policy
- Value added benefits for safe driving to promote this plan.
Advantages:
- Damage to the vehicle due to a road accident
- Covers your Vehicle due to theft
- Damage incurred due to natural and man-made calamities such as floods, riots, etc.
- Damage due to a fire or an explosion.
Disadvantages:
- Damage while driving the car without a valid driving license
- Damage while driving the vehicle under the influence of alcohol or drugs
- Depreciation of the vehicle due to regular wear and tear
- Damage due to electrical or mechanical failure.
Who should opt for Pay as you drive Car Insurance?
- If you have more than one car and use one car regularly and the other cars rarely, then it is advisable to take “Pay as You Drive” car insurance for those cars which are used rarely.
- In case you use your car only for limited kilometers on special occasions then you can opt for “Pay as You Drive” insurance.
- It is ideal for car owners who drive their vehicles very less such as seasonal drivers
- This plan is tailor-made for people who mostly commute through public transport and rarely use their car
- If you use your car hardly and rashly it is usable.
Concept of Telematics:
Some insurance companies provide you with a “telematics” device to keep a track of the driving pattern of the car. The speed at which the car is driven, the number of times brakes are applied, and several kilometers driven would be captured with the help of this device and shared with the insurance company for better calculation of premium.
The concept of telematics is introduced to award the drivers based on their driving patterns. Good drivers are awarded reduced premiums while arrogant drivers are penalized with the loading of premiums.
|
Features |
Benefits |
| Flexibility |
If you are traveling further than the declared distance, you can purchase an extra km range to ensure continuous insurance coverage |
| Telematics Device |
Your car insurer might ask you to install a Telematics Device and download the app, which can provide you with insights on your driving so that you can improve and save money. |
| Customization |
You can pick the appropriate insurance policy for your vehicle based on how often you typically use it. |
| Low Premium |
If you use your car less, the car insurance price will reflect this accordingly. And Comprehensive Car Insurance has a useful premium that is independent of distance traveled or mileage |
How much you can save on “Pay as you Drive”?
| Driving Slab limit (km per year) |
Discount on Premium |
Own Damage Premium |
Discounts |
| Regular unlimited driving |
Nil |
10,000 |
Nil |
| 2,500 km |
10% |
9,000 |
1,000 |
| 5,000 km |
15% |
8,500 |
1,500 |
| 7,500 km |
25% |
7,500 |
2,500 |
What happens if the Declared Car Usage Limit is exhausted?
If your car usage limit of 15,000 km gets exhausted, you won't be charged extra. You can still enjoy the benefits of your existing comprehensive car insurance policy. However, during the time of claim settlement, the insurer may ask you to pay some amount as a co-payment.
If you are auto-renewing your insurance policy, but have reached the minimum required kilometers specified, you will not be eligible for a premium discount. Thus, to avail of this plan, you must upload photos of your car before the expiry of your policy.
How does “Pay as You Drive” Car insurance work?
Under the “Pay as you drive” car insurance, you have the option to choose the number of kilometers you would drive in a year. These slabs would be 2500km, 5000km, and 7500km and the premium for each slab would be different depending on the make, model, age, and other factors of the car.
Step 1: Select one of your choices, and pay a premium for the same. Opt for add-ons if required.
Step 2: Send a photo of your odometer reading to the insurance company for record purposes.
Step 3: Start driving your car as usual while keeping a note of the total kilometers driven. Ensure that the selected limit of kilometers is not crossed.
Step 4: If the distance driven exceeds the slab, then inform the insurance company of the same.
Step 5: Insurance Company will ask you if you want to convert to a regular comprehensive policy or upgrade your slab.
Step 6: If you want to upgrade the slab, pay the proportionate premium to the insurance company and drive your car as usual.
Step 7: Remember, it is of utmost importance to inform the insurance company if you exhaust your limit, failing which could result in declining your Own damage claims.
“Pay as you drive” car insurance v/s “Regular Comprehensive” Car Insurance:
“Pay as you drive” is a comprehensive car insurance plan launched in the Indian market recently where the premium is charged only for the number of kilometers driven under the own damage section. The premium for the Third party section remains the same under the Pay as you drive section of car insurance.
In regular comprehensive car insurance, the premium is paid for one year or three years and the premium paid depends on many factors such as past claim experience of the insurance company, No claim bonus of the insured, etc.
Let us understand the difference between Regular Comprehensive insurance and Pay as you drive car insurance to decide which one caters to our needs.
| Title |
Pay As You Drive |
Regular Comprehensive |
| Premium |
The premium for Pay as you drive is based on the number of kilometers slab selected for that particular year. The premium would be less compared to regular comprehensive insurance as the user would be less. |
The premium for Regular Comprehensive insurance is based on the loss ratio of that particular model apart from other factors such as make, model, cc and place of registration, etc., |
| Usage |
In pay as you drive insurance the usage is limited to a definite number of kilometers such as 2500km, 5000km, and 7500km. |
In Normal comprehensive insurance, the usage is not limited to kilometers. The customer is free to drive any number of km till the expiry of the car insurance policy. |
| Renewal |
Once the number of kilometers is exhausted i.e. usage exceeds the particular slab, then by paying an extra premium a higher slab can opt or it can be converted to regular comprehensive insurance by paying a pro rata premium. |
The validity of regular comprehensive car insurance is One year from the policy start date. After one year, the customer can opt for renewal. Since there is no slab system, the renewal is to be done each year. |
| Add-ons |
Pay as you drive insurance is applicable only for the Own Damage section of the policy, hence the add-ons can be selected accordingly which will be valid only for the period of the slab i.e., the add-ons will exhaust once the number of kilometers is exhausted. |
The add-ons under the regular comprehensive insurance are to be taken at the time of policy issuance and are valid throughout the policy period. |
| Third Party Coverage |
Third party coverage remains the same in both types. The premium for a third party is charged for one year from the policy start date. |
Third party premiums and coverage are valid for one year period from the policy start date. |
| Own Damage Coverage |
The coverage for its damage section is limited to the number of kilometers/ slab selected. Once the slab is exhausted the own damaged covers cease to function. |
The own damage coverage is valid for one year under the regular comprehensive section. |
| Claims |
Own damage claims made under the pay as you drive section will be checked for the slab validity before settling the claims. Any own damage claim made after the exhaustion of the slab would be rejected, however, the third party claim would be settled as per the terms and conditions within the validity of the TP policy. |
The own damage claim made within the validity of the policy period is settled subject to the terms and conditions of the policy. The same applies to the Third party claims in the regular comprehensive insurance policy. |
| Who Should Opt? |
Pay as you drive insurance is suitable for people who use their car rarely and for people having more than one year who are used rarely. If you use your car monthly once or twice then it is better to opt for Pay as you drive insurance to reduce the premium paid. |
People who drive their car frequently should go for regular comprehensive insurance as the number of kilometers driven would be higher than the slabs available under the pay as you drive section. |
Pay As you drive is a recent trend in the Indian market filed under the IRDA sandbox regulations and is to make an impact in Indian insurance.
For the best online car insurance quotes please visit PolicyBachat where you can check for the best car insurance quotes from different insurers.
How to Buy Pay as you Drive Car Insurance?
Pay as you drive car insurance can be purchased online from the PolicyBachat portal in two easy steps. At PolicyBachat we cater unbiased comparison of quotes and a 24*7 customer assistance team whose motive is to give our customers the right quotes with compare car insurance rates online.
- Go to compare car insurance quotes online at PolicyBachat.com
- Fill in the required details and select your Car Model & Variant, RTO Location, Registration date, and Email address.
- Click on the “START SAVING MONEY”.
- Choose between a Third-Party Liability Only and a Standard Package (Comprehensive Insurance).
- Premiums with different insurance companies are displayed with low premiums
- Select required Add-ons/Riders and discounts, or you can Edit Policy Details as per your requirement
- After that fill in the ‘vehicle owner details and personal details.
- Purchase the best Pay as you Drive Car Insurance Policy using online payment
- If any queries are raised call: 1800–123–4003.
How to Claim Pay as You Drive Insurance?
- Contact the insurance company within 48 hours of the accident or theft
- File an FIR in case of third party damage or theft of the bike
- Submit the required documents
- The insurance company will appoint a surveyor to check on the extent of damages
- The car will be sent to the garage for repair
- Cashless service will be provided in case the car is being repaired at a network garage
- In case of theft, the insured declared value will be given to the policyholder after the police share a nontraceable report.
Conclusion:
The idea is that drivers pay for the number of miles they drive, not the type of car they own. This new model will be used to calculate your premium instead of using a traditional system where you are charged based on your vehicle's make and model.
The way it works is simple - you pay a flat monthly fee, which includes all driving costs such as gas, insurance, maintenance, and depreciation. You then buy a device called an "On Board Unit" or "OBU" that plugs into your car's computer system to track how far you've driven.
The best thing about this new system is that it rewards drivers who drive less by charging them less for their premiums.