In such cases, car insurance may feel more like a forced liability than a blessing in disguise. After all, you will be required to pay a hefty premium every year even when your car is occasionally used. You also don’t have the option of doing away with car insurance as it a legal requirement in India under the Motor Vehicles Act, 1988. If you drive your car on a public road even once, it should be protected under a valid motor insurance policy to avoid any penalties. Does that mean you’ll have to keep paying insurance premiums for cars that are hardly used?
Well! There is one way to avoid paying hefty car insurance premiums for vehicles that are not used frequently. You can get the best car insurance in India at an affordable price by buying the pay as you drive car insurance plan for your four wheeler.
The pay as you drive car insurance is a type of car insurance policy that charges premiums based on the usage of the car. It is a usage-based car insurance plan that takes into account the kilometres driven by a car for a fixed time period and charges premium based on it. The premium for this type of motor insurance is directly proportional to the usage of the car. This means if you drive your car occasionally, you will pay a lesser car insurance premium but if you drive regularly, you will have to pay a higher premium amount. This is probably the reason why pay as you drive car insurance is also considered as pay as you use car insurance.
The pay as you drive car insurance made its way into the Indian insurance market in the first half of 2020. Although it was available in the US for quite some time, it saw the light in India under IRDAI’s (Insurance Regulatory & Developmental Authority of India) Sandbox project. The project is experimental and stands valid until 31 January 2021. Post the deadline, the IRDAI will evaluate the success of the plan in India and will grant its approval/ disapproval to motor insurance companies on whether or not pay as you drive car insurance should be offered in India.
Several motor insurance companies in India today offer pay as you drive car insurance plan. As part of the buying procedure, you are required to provide an estimate of the total number of kilometre that your car is likely to cover during the policy tenure, which is mostly of one year. Most insurers offer fixed kilometres brackets, such as 2500 km, 3000 km, 5000 km or 7500 km, under the pay as you drive car insurance plan. All you have to do is to choose the most suitable kilometres bracket/ slab as per the usage of your car and your car insurance premium will be based on it. However, the kilometre slabs may vary from one insurance company to another.
For example, if your car covers approximately 2000 km in a year, you can choose a kilometre bracket of 2500 km/ 3000 km as per the slabs offered by your insurer. The motor insurance company will charge you a premium as per the 2500 km/ 3000 km bracket.
The pay as you drive car insurance consists of both third party and own damages cover. Just like the regular car insurance plans, the third party premium rates under pay as you use insurance is decided by the IRDAI. However, the own damages premium is estimated based on the kilometre slab you choose. Just like the best car insurance in India, you can also choose amongst the available add-on covers to enhance the protection level of your car.
Additionally, your insurance provider will also install a telematics device in your car. This device will track the usage of your car and will help you to check the remaining balance under your kilometre slab. Besides, it will also monitor the condition of your car along with your driving habits.
The good part is that you have the option of recharging the kilometres balance during the policy year if you have crossed the kilometre limit under your slab. You can also switch to higher kilometre category if your vehicle usage has increased.
Pay as you drive car insurance plan provides the following benefits to car owners:
Generally, motor insurance companies determine car insurance premium based on the features of the car (make, model, age, engine cubic capacity) along with other factors such as the geographical location, voluntary deductibles, etc. These factors help to assess the liability of the motor insurance provider in case of an emergency. Logically, the chances of occurrence of an emergency are reduced substantially if your car is not used often but even then your car insurance premiums are not reduced.
With pay as you drive car insurance, you are charged a premium based on the actual usage of your car. If the car is used less, a lower premium amount is charged to you. Hence, pay as you drive car insurance lowers your premiums if you don’t drive your car frequently.
The pay as you drive car insurance allows you to customize your insurance coverage as per your requirements. Besides the own damages cover and mandatory third party cover, this plan also provides you with add-on covers, such as zero depreciation cover, roadside assistance cover, etc. These add-on covers extend the basic car insurance cover as per your needs and preferences but in exchange for an additional premium amount.
Moreover, pay as you drive plan also allows you to switch to a higher kilometre slab or recharge your slab limit during the policy tenure if you have exhausted your kilometre limit. You can also move back to a regular car insurance plan of your insurer if you are unsatisfied with pay as you drive car insurance plan.
If you buy pay as you drive car insurance, your motor insurance company will install a telematics device in your car for free. You will be neither required to pay for the telematics device nor for its installation in your four wheeler. Besides, the telematics device will monitor the health of your car and will also track the kilometre balance as per your chosen slab. The device will also keep a tab on your driving habits.
Few car insurers offer floater coverage option under pay as you drive car insurance plan. This option is suitable for people who own more than one car. The floater cover enables you to get all your cars covered under a single car insurance policy. Thus, floater coverage makes pay as you drive plan as the best car insurance in India for people who own multiple cars by eliminating the need to buy individual car insurance policies for each car.
One of the major benefits of pay as you drive insurance is that you get third party coverage throughout the policy tenure even if your kilometre limit has been exhausted. Once you purchase the policy, the third party coverage gets activated for an entire year. If your slab balance gets over and you don’t wish to renew it before the policy expiry date, you will lose the own damage cover of your car. However, the third party cover on your car will continue until the policy gets expired.
Some motor insurance companies also provide discounts to car owners at the time of renewing their pay as you drive insurance policy. Depending on the insurance company, you can save your premiums by at least 5 per cent to a maximum of 25 per cent, thereby, reducing your car insurance premiums even more.
Pay as you drive car insurance sounds promising but is it the right policy for you. Well! The pay as you drive car insurance is ideal for people whose cars are not used frequently. They may include:
Summing It Up
Pay as you drive plan is the best car insurance in India for people who use their car occasionally. It not only provides more affordable car insurance premiums but also gives you the option of renewing your kilometre balance between the policy year. If you are one of those people whose car stands in the parking more than it hits the road, then pay as you drive car insurance is made for you.
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