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Can You Get Add-on Covers Under Pay as You Drive Car Insurance?

By Vikas Chandra Das
21 July 2022, 11:46 AM

Pay-as-you drive insurances are popular in developed nations and it is gaining momentum in India too by virtue of their cost-effectiveness. It offers mandatory third-party liability cover and also offers comprehensive coverage based on the distance travelled by car.

What is Pay as You Drive Car Insurance?

As the world is innovating to navigate through these tough times, so is the Insurance Regulatory and Development Authority of India (IRDAI). A pay-as-you-drive car insurance cover, which started as a sandbox project of the IRDAI, is becoming a working reality in India.

It is a comprehensive car insurance cover that charges a premium based on the usage of the car which is detected by a telematics device. It makes a comprehensive insurance plan way more affordable than a regular car insurance plan. Akash, who wants to buy pay-as-you-drive car insurance, is confused i.e. which add-on cover he can buy along with his car insurance policy to have better protection. Well, this is not the case with Akash, just like him, many other individuals also feel confused, i.e. which add-on covers one can buy along with pay-as-you-drive. Don't worry, all you need to do is just read the article below.  

Does It Have the Option of Add-ons?

One has the option of customising their insurance cover as per their needs and requirements. This implies that one can opt-in for add-ons such as zero depreciation cover, road assistance cover, return on invoice cover, etc.

Some of the available add-ons in detail are as follows -

  • Zero depreciation cover – entitles the insured to claim the entire cost of replacing the damaged parts of the car. It ensures that the wear and tear costs are not deducted while making the final settlement. Zero depreciation cover is valid for cars that are up to 5 years of age. There exists a maximum limit of 2 claims for the policy period.
  • Roadside assistance cover – promises round the clock services such as emergency services, towing, refuelling, resolving technical issues, change of flat tyres, etc. The insurer sends the concerned person to the site of the accident/ breakdown and ensures that the car is taken care of.
  • Engine protect – is a must-have for owners of new cars, especially if they are expensive, high-end cars. It is generally opted by those living in flood-prone areas where waterlogging is a common phenomenon. This add-on provides compensation for even those upkeeps/ repairs in the engine that are not particularly related to the accident.
  • Return to invoice cover – a boon in case of a total loss, where the car is so severely damaged that the cost of repairing the car would be higher than the resale value of the car. Return to invoice add-on however cannot be used for minor damages to the car. As with most other add-ons, this can be purchased only if the car is less than 3 years old.

What are the Other Benefits of Buying Pay as You Drive Car Insurance?

  • Lower premiums: In pay-as-you-drive car insurance, the premium is charged based on the actual usage of the car which implies the lesser you use the car, the higher the amount of premium you can save on. One must choose the distance to be travelled slab for the policy period – it is usually in the form of three slabs namely, below 3000 km, more than 3000 km but less than 5000 km and more than 5000 km. Depending on the insurer, it is believed that the policyholder can easily save on at least 5% - 25% of their premiums.
  • A free telematics device: A telematics device is a device that will help the insurer track the distance travelled by car. In fact, the policyholder is to have a corresponding mobile application that will provide all driving-related information detected by the device. The insurer can also use the application to inform the policyholder about the exhaustion of the chosen kilometre slab and send subsequent top-op or renewal notifications. Insurance companies offer a free device to the policyholder in most cases.
  • Floater coverage if you own multiple cars: This option saves considerable time and effort for the policyholder and ensures that he or she will have all the policies in one place. Oftentimes, one can avail of attractive offers and benefits in lieu of floater coverage.
  • Third-party coverage even if your kilometre limit is exhausted: One has the option of switching to a higher kilometre slab in case the kilometre slab has been exhausted during the tenure of the policy. The policyholder also has the option of recharging his or her slab limit during the policy tenure.

Who Should Buy Pay as You Drive Car Insurance?

This policy will benefit those who rarely use their cars. This includes individuals who use public transport often, people who carpool often, and those who own multiple cars.


Pay-as-you-drive insurance plans, best suited for those who rarely use their cars, is affordable car insurance policy which is an option worth considering. Understand the terms and conditions of the policy properly before opting in for the same. The goal must be to maximise the benefits and minimise the costs.

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