1What is pay as you drive motor insurance
Many things, including your insurance needs, must have changed as a result of the disastrous COVID-19 epidemic. Protecting your loved one's financial future has been a primary responsibility in the last two years. Furthermore, throughout this time period, people saw a decrease in their overall spendings since they can now distinguish between essential and luxury expenditures. Similarly, due to the sudden shift from offline to doing everything from the comfort of your home, and organizations too warming up to WFH or hybrid work culture, it's understandable that you don't drive as frequently or, if you own multiple vehicles, you don't drive them all equally.
Taking that into consideration, the Insurance Regulatory and Development Authority of India (IRDAI), in partnership with other insurance providers, has developed a “Pay as You Drive policy as a trial project”. Private car owners will be offered a usage-based motor insurance policy under this policy.
What is pay as you drive?
The Motor Vehicles Act of 1988 in India makes auto insurance compulsory. As a basic level of protection, the law mandates that all vehicles on the road have third-party liability insurance. However, it only covers third-party damages caused by your car. Provided that, to cover the damage to your own vehicle, you'd need comprehensive insurance. The cost of this own-damage component is determined by the vehicle's age, model, and type.
Pay as You Drive insurance is a type of motor insurance that provides comprehensive coverage at a lesser cost. This plan's premium is calculated based on how many miles you travel. This policy includes features like own damage and third-party liability coverage, as well as a discount on your own-damage premium depending on the distance/kilometers traveled.
In this unprecedented period, where the cases are rising yet again, everybody is looking out for options which can help reduce their financial burden to a certain extent. “Pay as you drive” is one such policy which will help you achieve the same.
Features and benefits of “PAYD”
1. Customization according to the usage- You can customize the insurance policy to the vehicle's usage and the estimated distance it will cover.
2. Lower Premium- When compared to the comprehensive car Insurance Policy, where the premium is not based on the car's usage or distance traveled, under PAYD you will pay a lower premium if you use the car less, automatically.
3. Policy Tenure- for PAYD the policy tenure is one year.
4. Telematics Device- Your motor insurance company needs you to install a telematics Device in your vehicle and download the required software. This can be advantageous to you because it will offer you actionable information about your driving and motor insurance requirements. Also, there are no charges for the installation of the device.
How to buy “PAY AS YOU DRIVE POLICY?”
Step 1: Customers must ideally have an existing car insurance coverage with the provider of these plans in order to purchase these policies.
Step 2: Consequently, go through all the policy's features, advantages, inclusions, and exclusions.
Step 2: Post that, the policyholder will be required to complete the standard KYC procedures as well as complete a consent form.
Step 3: After that, you must select a slab and a time period for which you want to be covered under the policy; this will vary depending on the insurer and product.
Step 4: Make the payment.
18 Apr, 2022