Pay As You Drive Insurance

Pay as you drive is a kind of comprehensive car insurance plan that charges a premium based on the usage of the car. It uses a telematics device to monitor how often the car is used depending on the total number of kilometres covered.

It is a newly-launched usage-based car insurance plan for private cars under the sandbox project of the IRDAI or the Insurance Regulatory and Development Authority of India. The project is currently available on a pilot basis for one year.

The pay as you go car insurance is considered more affordable as compared to regular car insurance plans. This is because the premium under this plan is charged based on the kilometres driven.

Features of Pay As You Drive Insurance

Take a look at some of the most interesting features of pay as you go car insurance:

Part of the pilot sandbox project of IRDAI
Policy tenure of one year
More affordable as compared to regular car insurance
IRDAI decides the third party premium
Own damage premium depends on car usage slab as per the total kilometres covered

How Does Pay As You Drive Insurance Work?

The pay as you go car insurance functions slightly different than a regular car insurance policy. Take a look at how pay as you drive insurance works:

First, you need to declare the car usage for the policy period of one year based on the total number of kilometres that your car will cover. You can choose one of the car usage slab options provided by your insurance company. The car usage limit under each slab may vary from one insurer to another. For instance, Bharti AXA provides kilometre coverage slab options of 2,500 Km, 5,000 Km and 7.500 Km.
Your insurer will install a telematics device in your car without charging any money for it.
If you wish to customize your plan by adding any add-on covers now is the time.
The premium will be charged based on the kilometre slab you pick and the add-on covers you choose.
The telematics device will track the kilometres covered by the car and show the remaining kilometre balance. It will also monitor how the car is being used and the driving habits of the driver.
Once the balance has been exhausted, you will have to get it recharged by contacting your insurance provider. The recharge is possible in between the policy tenure as well as at the end of the policy term.

Benefits of Pay As You Go Car Insurance

The pay as you drive insurance comes with several benefits that will make you fall in love with it. Take a look at the benefits of pay as you go car insurance below:

Lower Premiums

The premium amount under the pay as you drive insurance is calculated based on the total number of kilometres covered by your car. Besides, the usage slab is pretty low. Therefore, the premium turns out to be much lower than that of regular car insurance.
Free Telematics Device Installed

Under this type of car insurance plan, a telematics device is installed in your car free of cost. This device constantly monitors the condition of your car and the driving habits of the insured.
Custom Coverage

This insurance allows you to customize your car insurance cover as per your preference by opting for add-on covers. Moreover, it also allows car owners to shift to a higher usage slab or convert into a regular own damage cover if they have exhausted their car usage limit, provided they pay the additional premium.
Discounts on Premium

Under the pay as you drive insurance, premium discounts are offered by insurance companies on own damage insurance premium. Car owners can get a minimum of 5% discount to up to 25% discount depending insurance company

Who Should Buy Pay As You Drive Insurance?

Car usage varies for different kinds of people. Some may use them daily, while others may not use it as much. Taking cognizance of varying car usage behaviour of car owners, the pay as you drive insurance has been designed for the following kinds of people:

It is ideal for car owners who drive their vehicle very less.
It is perfect for people who own multiple cars and do not use all the cars in equal measures.
It is tailor-made for people who mostly commute through public transport and rarely use their personal car.
It is suitable for people who are often required to travel out of station and are unable to use their car a lot.

How to Buy Pay As You Drive Insurance?

Motor insurance company, such as Bharti AXA Car Insurance, has collaborated with Policybazaar to offer pay as you drive insurance to private car owners. In order to buy pay as you go car insurance online, follow the steps given below:

Select the option of buying car insurance
Choose a usage slab option as per the kilometre that the car is likely to cover in one year
Enter the details of your car’s odometer
Provide the other KYC information requested, such as your phone number, name, etc.
Fill-in the customer consent form
Select any add-on covers that you want to include in your policy
The premium amount will be shown as per the car usage slab
Pay the premium amount online
Pay as you drive insurance will be issued to you

What Happens if the Declared Car Usage Limit is Exhausted?

In case your car usage limit gets exhausted, you can recharge it in between the policy tenure or at the time of policy expiry. Pay as you drive insurance also gives you the choice of moving to a higher kilometre usage slab or shifting to a regular own damage car insurance, provided no claims have been made. However, you will be required to pay the difference in the premium amount.

Moreover, the third party cover under the pay as you drive insurance will continue to remain active even though the own damage cover will cease to exist until the plan is renewed. This means you cannot make any own damage claims if you have driven your car more than the declared kilometre limit.

Insurance Companies That Offer Pay As You Drive Insurance

IRDAI has approved several motor insurance companies to offer pay as you drive insurance during the first tranche of sanctions. The approved companies include Tata AIG Car Insurance, Go Digit Car Insurance and Bharti AXA Car Insurance amongst others. These companies are required to sell at least 10,000 pay as you drive insurance policies within six months in order to offer it as regular car insurance.

However, not all companies have launched their pay as you go car insurance plans as yet. Here is a list of motor insurance companies in India that are currently offering pay as you drive insurance for private cars on a pilot basis. Take a look: