Curious to know how 'Pay As You Drive' works in India? As a step towards 'Digital India', the Insurance Regulatory and Development Authority of India (IRDAI) introduced a new type of Own Damage (OD) vehicle insurance - Pay As You Drive.
Under this plan, you can pay discounted premiums towards Own Damage motor insurance based on your car's usage. If this seems interesting, learn how you can use this and benefit from this type of vehicle insurance.
What is 'Pay As You Drive' in India?
Pay As You Drive is a motor insurance policy that offers more cost-effective premiums based on the car's usage. The cost of this vehicle insurance is directly linked to the number of kilometres driven.
In other words, Pay As You Drive instills a sense of responsible ownership when you drive and it helps you save money on your car insurance policy, when your car is driven for less than 15,000 kilometres.
What is included in the 'Pay As You Drive' policy?
Pay As You Drive is available as both car insurance and bike insurance. However, as it is recently introduced, it hasn't been widely implemented in India yet.
While you check if your vehicle insurance provider offers this policy, here's more information on what this plan covers and what it doesn't.
Included | Not included |
Damage from man-made calamities like earthquakes, floods, riots, and others | Damage from driving after consuming narcotic substances or alcohol |
Theft | Damage caused by regular wear and tear |
Damage due to an accident | Damage from driving without a driving license |
While these are the usual inclusions and exclusions, it is vital to check the coverage details, along with any terms and conditions, before selecting a motor insurance policy.
How does 'Pay As You Drive' work in India?
While every vehicle is mandated to have a third-party liability cover, comprehensive Own Damage insurance can insure your vehicle in the case of an unfortunate event in the future. Pay As You Drive covers Own Damage at a discounted rate as the premiums are based on how many kilometres the car has been driven.
While each policy provider may have their different offerings and conditions, here is how the policy usually works.
Kilometres driven: While the premium depends on the distance driven, this policy is only applicable when your vehicle is driven for less than 15,000 kilometres. While purchasing this vehicle insurance, you will need to select the appropriate kilometre slab.
Odometer reading: The vehicle insurance provider will ask for a video of the odometer reading to determine how many kilometres your vehicle has been driven. An odometer measures and displays the total distance that your vehicle has travelled. It is typically located on the dashboard, providing an accurate reading of the vehicle's mileage.
Settlement: The claim settlement process is the same as that of regular motor insurance. In case the limit of 15,000 kilometres is exceeded, the insurer may ask you to pay some amount as a copayment. This is a fixed amount that you will need to pay out of your pocket at the time of receiving the service.
What are the benefits of 'Pay As You Drive'?
Cost-efficient: This policy's main advantage is its affordability as it considers the car's usage. If you do not use your vehicle often, you can reduce vehicle insurance costs without compromising on your motor insurance requirements.
Customisable: You can customise your policy annually by estimating the car's usage. In addition to this, you can simply pay a top-up amount to revise that estimated distance, in case you exceed the number of kilometres selected in your plan.
Convenient: If you cross the declared estimated distance, you can simply top up your plan to revise the distance covered in your plan. It is important to confirm this with your policy provider before purchasing the plan.
Should you opt for the 'Pay As You Drive' cover?
If you're still thinking about whether this vehicle insurance plan is the right one for you, it's important to consider whether this type of motor insurance suits your requirement.
Here are a few scenarios in which this vehicle insurance policy can prove beneficial:
Multiple vehicles: If you own multiple vehicles and do not use each one regularly, this may prove to be a cost-effective and smart approach.
Occasional vehicle usage: If you prefer public or other transport and do not use your vehicle regularly.
Minimal utilisation: If you use your vehicle within the kilometre slabs specified by the policy provider.
For example, if your vehicle's usage is only 5,000 kilometres, you can consider a Pay As You Drive cover. Additionally, you can choose slabs like -
less than 3,000 kilometres
3,000 - 5,000 kilometres
more than 5,000 kilometres, etc.
Conclusion
While a comprehensive cover insures your vehicle, you can reduce your premium expenses with a Pay As You Drive policy. However, it is important to find out all the details of an offered policy to make an informed decision. Additionally, while buying vehicle insurance, consider your requirements and usage to choose the best-suited plan. Make sure you read about what is included and excluded in your motor insurance policy and also check all the related terms and conditions before making a purchase.
