Pay as You Drive Car Insurance

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When you have more than one car at home and do not drive all of them as much, you may often feel getting them all insured is a costly affair. But remember, even if you drive the car less than once a month, it is essential that it is insured. Irrespective of how much a vehicle is used, as per the Motor Vehicles Act, 1988 each vehicle on road has to have an active insurance policy. 

To adapt to the changing insurance needs of people innovations are being done and unconventional insurance products are being introduced in the market. One such product that has been launched under the guidelines of the Insurance Regulatory and Development Authority of India (IRDAI) is Pay As You Drive Car Insurance. Here, we are going to learn all about Pay As You Drive Car Insurance.

What is Pay as You Drive Car Insurance?

Pay As You Drive Car Insurance is a part of comprehensive car insurance where you have the option to choose ‘own damage’ based on the running of your car. You simply need to estimate the distance your car would travel in a year and based on this, your car insurance policy would be customised. 

There are three specified slabs - 2500 km, 5000 km and 7500 km, under the Pay As You Drive Car Insurance. When buying the policy, you have to inform the insurance company about your car’s odometer reading and then select the distance slab. On the basis of your expected running of the car, the premium would be decided. 

Features & Benefits of Pay as You Drive Car Insurance

The unique features of Pay As You Drive Car Insurance to make it a very beneficial option, in case you use your car or cars very little. Let us take a look at how:

  1. Affordable Policy
    The premium that you have to pay under Pay As You Drive Car Insurance is much lower as compared to a standard car insurance policy. As it is based on the expected distance covered by your car, the usage slab is low and so is the premium amount.
  2. Free Installation of Telematics Device
    Your car insurance company will install a telematics device in your car which will monitor the car’s condition and your driving habits. This device will be installed free of charge.
  3. Customised Coverage
    You can further customise your insurance policy by opting for add-on covers. If in case you exhaust your car-usage limit, you also have the option of shifting to a higher usage slab or even opting for a regular damage cover. Note that when opting for a different slab or option, you will have to pay an extra premium for the same.
  4. Avail Discounts
    Depending on the offers given by your insurance company, you can avail a 5% to 25% discount on the ‘own damage’ premium.

Who Should Opt for Pay as You Drive Car Insurance?

The Pay As You Drive Car Insurance is most suitable in the following conditions:

  1. If you have a car that you hardly use
  2. If you rarely use your car to cover long distances
  3. If you have more than one cars and mostly use only one of them
  4. If you have more than one cars and use them equally

How Premium is Calculated for Pay as You Drive Car Insurance?

The third-party premium does not change in Pay As You Drive Car Insurance, and it is decided on the basis of the cubic capacity of your car. Depending on the distance-slab that you choose you can avail some discounts. The lower your slab, the lesser premium you pay. Add-on options would add a little to the premium too. The final premium amount would then depend on the policy and the insurance company you select. 

You would have to fill in the consent form, provide your KYC details and odometer reading. On the basis of the distance-slab that you select and the add-on added, the premium of the insurance policy would be determined.

How to Buy Pay as You Drive Car Insurance?

Pay As You Drive Car Insurance is a newly launched product and is being offered as a pilot plan. There are only a handful of car insurance companies in India that are offering them. You can purchase them online through these company websites, through insurance aggregator websites, and agents. 

Your insurance company will then install the telematics device in your car, which would keep a track on the distance covered by your car. The device besides monitoring how the car is being used would also show you the balance distance.

In case you exhaust the total usage distance, you can get a recharge. Note that a recharge is possible only before the policy expires and the balance will expire with the policy. Till the time you recharge the policy, your car would be covered only with the continuing third-party insurance. So, if your car is involved in an accident, your own damages will not be covered. 

Pay as You Drive Car Insurance FAQs

  • 1. How distance is calculated in Pay As You Drive Car Insurance?

    The car insurance company will install a telematics device in your car that would keep a track on the distance covered by your car. The device besides monitoring how the car is being used would also show you the balance distance.

  • 2. Is Pay As You Drive Car Insurance approved by IRDAI?

    Yes, the policy has been launched under the guidelines of the Insurance Regulatory and Development Authority of India (IRDAI).

  • 3. Can I choose Pay As You Drive Car Insurance for my new car?

    Yes, you can buy it for new car insurance, however, Pay As You Drive Car Insurance is most suitable in the following conditions:

    1. If you are hardly going to use the new car
    2. If you are rarely going to use your car to cover long distances
  • 5. What is the policy tenure of Pay As You Drive Car Insurance?

    The tenure of the policy is 1 year.

  • 6. If I exceeded the chosen distance slab?

    In case you exhaust the total usage distance, you can do the following:

    1. You can shift to a higher usage slab 
    2. Get a recharge through the insurance company. Note that a recharge is possible only before the policy expires and the balance will expire with the policy.
  • 7. Are third-party claims covered under Pay As You Drive Car Insurance?

    Yes, third-party car insurance claims are covered. The third-party premium does not change in Pay As You Drive Car Insurance, and it is decided on the basis of the cubic capacity of your car. 

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