Things to Know About Pay-As-You Drive Car Insurance

The insurance industry has evolved by leaps and bounds with its ever-growing products and services through customised schemes. Insurance companies have catered to all, from health and savings to properties and vehicles. By leveraging technology, the industry has witnessed a digital transformation all over.

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In this blog, we shall be deep-diving into what Pay-As-You-Drive Car Insurance is all about.

What is Pay As You Drive Car Insurance?

Having a car insurance is mandatory in India. However, paying whole premiums on cars you only drive occasionally is a big waste of money. That is where Pay As You Drive(PAYD) comes into the picture. PAYD makes an ideal choice for those who do not drive occasionally.

Pay-as-you-drive (PAYD) is a type of vehicle insurance that bases costs of the kind of vehicle, time, distance, behaviour, and place. In other words, it’s also called usage-based, mile-based auto, and pay-how-you-drive car insurance.

The PAYD car insurance policy allows its policyholders to save on premiums by paying for the kilometres they drive.

PAYD is one-of-its-kind new-age car insurance with a comparative premium paid based on kilometres covered. That implies you pay the premium for the distance you have driven.

How Does Pay As You Drive Car Insurance Work?

The PAYD works quite differently from a regular car insurance policy. It ensures more practical pricing for the car insurance policy. The policyholder has to declare the car usage based on the usage slab provided by the insurer while buying the Own Damage(OD) policy.

The premium is calculated based on the total distance driven during a policy year in this car insurance policy. The distance ranges covered fall under different slabs, which you may choose depending on your usage. The OD discount will vary accordingly.

In other words, customers can estimate a distance based on the average daily run, and the system will calculate the premium accordingly.

Leveraging Technology

Insurance companies use smart technology-powered tracking devices to check the distance covered in kilometres. Some of the devices are:

• GPS device
• On-board diagnostic sensors
• Telematics

Key Features

• Plans commonly start with 2500 kilometres per year, progressing to 5000, 7500, 10000, etc.
• The premium depends on the distance coverage slab
• OD insurance premium discount of up to 25%
• Add-on covers provide flexibility to enhance the car insurance cover
• Coverage for own damages and third-party liabilities

Who should go for Pay As You Drive Insurance?

• You do not drive often, yet pay the same premium as a frequent driver
• Senior citizen
• Reside in remote areas and drive rarely
• A small-town resident driving less than 10,000 km/year
• Having a short-term rented car

What are the benefits?

• PAYD can benefit its policyholders in numerous ways more than they could imagine. Some of them are:
• Up to 25% on own damage premium depending on the distance covered during the policy year. PAYD is a much less choice than regular insurance policies.
• There are no charges for the installation of any devices.
• PAYD flexibly allows you to cover your car depending on your usage.
• With the help of GPS, telematic works as an anti-theft device.

Want to Buy PAYD Car Insurance Online – Here’s how?

PAYD is a new happening product in the market. That’s why many general insurance companies are trying to show support to their customers by offering this feature.

Buying this car insurance online is a simple procedure. Let’s find out.

1. Visit your insurance company’s official website.
2. Login to your account and buy the PAYD cover
3. You might need to provide personal and vehicle details to buy car insurance online.
4. In the next step, the insurance company will install the tracking device in your car without extra charges. The device will track the distance your car covers.
5. You must declare your car usage details and other important information to the insurance provider and choose the car insurance policy accordingly.
6. Complete the payment and download the PAYD cover with car insurance online.

What PAYD Covers Vs What PAYD Does Not

PAYD covers car damages due to the following:

• Accident
• Collision
• Theft
• Vandalism
• Man-made/natural disasters

PAYD does not cover damages due to the following:

• Driving without license
• Driving under the consumption of drugs
• Depreciation
• Electric/mechanic issues

What is the process of claiming settlement?

The settlement process is like any other plan as long as the distance does not exceed the specified limit. The policyholder may bear a certain claim amount if the distance exceeds the limit.

Which are the popular PAYD insurance providers?

• HDFC ERGO General Insurance
• ICICI Lombard
• Kotak General Insurance
• Reliance General Insurance
• TATA AIG General Insurance
• New India Assurance
• Digit General Insurance
• ACKO General Insurance
• Zuno General Insurance

Conclusion

The PAYD model is gaining popularity in India as insurance providers choose “Pay As You Drive” as a substitute for a regular car insurance policy.

By leveraging technology, PAYD can be an optimal insurance solution for providers and policyholders.

For regular drivers, a complete insurance package is the best recommendation. However, for occasional drivers, PAYD is an optimal financial decision.

Disclaimer : The above is a sponsored article and the views expressed are those of the sponsor/author and do not represent the stand and views of The Tribune editorial in any manner.