Recently, the Insurance Regulatory and Development Authority of India (IRDAI) has allowed motor car insurance companies to offer policies that are based on mileage and driving quality. These policies are known as Pay As You Drive Car Insurance policies. Four wheeler insurance Companies can offer discounts to cars that are not driven extensively. In this article, we will talk about Pay As You Drive Insurance and discuss its features and workings in detail.
Understanding Pay As You Drive Car Insurance Policy
When you start looking for insurance for a car, you can choose between a third-party liability-only cover and comprehensive four-wheeler insurance based on your needs. If you are opting for a comprehensive policy, choose from a range of add-on covers to customise it based on your driving pattern and style. You can also use an online car insurance calculator to buy a policy based on your budget.
The Pay As You Drive (PAYD) Car Insurance policy is designed for car owners who do not drive regularly. Under these policies, car owners can get discounts on premium rates provided they have driven within certain limits set by the insurance provider. Here are some features of a Pay As You Drive insurance plan:
- Most insurance providers offer a discount on the premium amount if the car has been driven for less than 15,000 km.
- These plans are ideal for car owners who travel short distances in their vehicles or use them occasionally.
- The benefits can go up to 10 per cent of the premium amount.
How does Pay As You Drive insurance work?
The Pay As You Drive car insurance is a new type of comprehensive four-wheeler insurance policy that offers coverage from third-party liability and damage to the insured vehicle. The distinguishing feature of this policy is that the premium depends on the distance travelled using the insured car. Here is how it works:
- Distance travelled – The premium of a Pay As You Drive car insurance policy is calculated based on the distance travelled. Currently, discounts are available to cars that have been driven for less than 15,000 km.
- What does the odometer say? – Car insurers look at the odometer reading to determine the distance travelled. Car owners are required to upload a video of the odometer of the insured car before the policy expires to get the benefits.
- No need for telematics – Telematics is the method used to monitor a car’s performance using GPS and other onboard technologies. In Pay As You Drive insurance, telematics is not used, and the insurer offers discounts based on the declaration of the policyholder.
- Maximum available discount – Under Pay As You Drive insurance, you can get a maximum discount of up to 10 per cent on the car insurance premium.
- Claim settlement – If you have not exceeded the limit of 15,000 km, then the claim settlement process is normal. If you exceed the limit, the insurer might ask you to bear some of the claims as a co-payment.
In simpler terms, Pay As You Drive insurance is ideal for car owners who use their cars sparingly. Car insurance companies can offer discounts on premium rates since the risks are fewer. With IRDAI allowing insurers to offer mileage-based policies, the Pay As You Drive policies are gaining popularity among car owners who do not drive frequently or long distances.
With the launch of Pay As You Drive insurance policies, car owners have more options to get cost-efficient coverage for their cars. These policies are a good option for car owners who do not drive extensively. With a discount of up to 10 per cent on the premium, they can get affordable insurance plans with coverage from third-party liability and damages to their vehicle for various reasons.