IRDAI has permitted general insurance companies to implement ideas, including Pay As You Drive insurance for private cars and two-wheelers that belong to the same individual owner. Since comprehensive car insurance is costly, Pay As You Drive comes to the rescue to turn things around. IRDAI has often urged insurers to include cutting-edge features in their product offerings to customers to protect policyholder interests and broaden insurance penetration in India. Let us understand how this type of insurance can enable you to save money.
What is Pay As You Drive Insurance?
Pay As You Drive insurance is a type of comprehensive car insurance that works based on the running of your vehicle. Simply put, you only pay for the number of kilometres you drive. The PAYD Car Insurance has three predetermined slabs: 2500 km, 5000 km, and 7500 km. When purchasing the coverage, you must tell the car insurance company the distance you will travel on your vehicle and then choose the slab accordingly. The premium would be set based on how you anticipate the running of your vehicle.
Key Features & Benefits of Pay As You Drive Insurance
Let us take a look at some of the important features & benefits of Pay As You Drive Insurance that will help us understand it better.
You may tailor the insurance coverage to the vehicle's usage in terms of the projected distance traveled.
If you believe you are likely to exceed the claimed distance, you can add the appropriate km range to assure continued insurance coverage.
If you travel less in your car, you will pay a lesser premium than if you purchased a generic Comprehensive Car Insurance Policy, where the cost is not based on the car's usage, or distance travelled.
The insurer may want you to install a Telematics Device in your vehicle.
How Does Pay As You Drive Insurance Work?
Before you buy PAYD Insurance online, it is crucial to understand how it works.
- Declare Car Usage: The first thing you must do is specify how you will use your vehicle over the one-year policy period depending on the total amount of kilometres it will travel.
- Odometer Reading: To receive the benefits of this plan, you must upload a video stating your car's odometer reading before the policy expires.
- Premium: Once you are approved for this plan, you are entitled to earn a 10% reduction on the cost of your own damage insurance.
- Claim Process: The claim will be resolved as usual if it falls within the defined slab. When a claim exceeds this cap, the policyholder could be requested to make a co-payment of a particular amount.
Who Should Buy Pay As You Drive Insurance?
Pay As You Drive insurance will work most appropriately for those:
- If you rarely drive your car.
- If you don't frequently travel longer miles in your vehicle.
- If you own many vehicles but only often use one of them.
- This strategy is specifically designed for those who rarely or never use their personal vehicles for commuting and majorly depend on public transportation.
How Premium is Calculated in Pay As You Drive Insurance
The following are the key elements that affect how much you pay for vehicle insurance:
- Type of Vehicle: When using a car insurance calculator, the kind of vehicle, its make and model, registration date, and so on, all play an important part. So when you are entering the details in the insurance calculator, make sure you type the correct information.
- Type of Policy: As we all know, car insurance is classified into two types: third-party and comprehensive. Your premium will be reduced if you have a third-party plan. If you choose a comprehensive plan, however, you will have to pay a larger premium. As a result, you must select the coverage that best meets your needs because it will affect your overall motor insurance premiums.
- Age of the Vehicle: The insured declared value, or IDV, is a critical component of a car insurance calculator. The value of your automobile decreases as it ages. As a result, an older vehicle with a greater IDV has a lower car insurance rate.
- Riders: Riders are optional coverages that may be added to a standard vehicle insurance policy. Your insurance rates will rise if you purchase riders for additional protection. As a result, you should grasp the scope of each rider and select the ones that will provide you with the most value.
- NCB: The no claim bonus (NCB) is a discount for not filing claims. This discount grows year after year. If you have a lot of NCB, you will get a substantial discount on your car insurance price.
So, after considering all these factors, your car insurance company will decide your premium.
How to Buy Pay As You Drive Insurance Online
You may buy them online from different car insurance company websites or through an insurance aggregator.
Buy from the official website of the insurance company
- Visit the website of the insurance company and enter the "Car Insurance" page
- Choose the car insurance plan you like
- Fill in all the information
- Tap the Buy button
- Proceed with payment
- The car insurance company will send the policy documents to your email address
What if You Exceed the Declared Car Usage Limit?
You will not be charged extra if your vehicle usage limit is reached. You can continue to use your existing comprehensive motor insurance coverage. However, throughout the claim settlement process, the insurer may request that you pay a co-payment. So, It's important to first evaluate your driving habits, patterns, and requirements before deciding on a PAYD coverage or a Comprehensive Policy to insure your automobile.
Question: - What is PAYD?
Answer: - The premium will be calculated based on an individual's customised coverage. As a result, choosing a Pay as You Drive add-on in addition to the regular car insurance will benefit customers with limited vehicle utilisation.
Question: - How many times can one claim car insurance in a year?
Answer: - There is no specific number as of now. But, it's important to read the terms and conditions carefully while buying a PAYD policy.
Question: - What do we understand by the No Claim Bonus in a car insurance policy?
Answer: - NCB is a premium discount that you can receive if you do not file any claims throughout the term of your 4-wheeler insurance policy.
Question: - Is there a way to get a duplicate copy of my motor insurance plan?
Answer: - Yes, you may obtain a duplicate copy of your 4-wheeler motor insurance policy by visiting the insurer's website. You must log in with your credentials and provide the necessary information.
Question: - How long will it take for me to acquire the coverage if I buy vehicle insurance online?
Answer: - When you purchase vehicle insurance online, the policy will be delivered to you shortly after the insurance payment is paid. Your email address will receive a copy of the policy document.