Pay as You Drive Car Insurance: Meaning, Working, and Benefits

Pay-as-you-drive insurance is a type of comprehensive insurance in which the four-wheeler's usage determines the premium cost. The car's usage is tracked using a gadget that maintains the vehicle's overall distance travelled. The Insurance Regulatory and Development Authority of India (IRDAI) has announced this usage-based policy, which is presently being tested as a one-year trial project. 

The governing body, as well as the insurance providers, work together to meet the demands of new and current policyholders and make their insurance experience pleasant. The Pay As You Drive (PAYD) or Pay As You Go concept has been extensively studied in other nations, but it is relatively new in India.

Pay as You Drive Car Insurance: Meaning, Working, and Benefits

Mentioned below is everything you need to know about Pay as You Drive Insurance including the meaning, working as well as the benefits-

1. How Does Pay As You Drive Car Insurance Cover Work?

        This is not your ordinary car insurance policy. The following is how it works-

• To begin, the four-wheeler's usage for a one-year insurance period must be stated (based on total kilometers driven). Insurance companies have policies that provide various use slabs, which range from one insurer to the next. Bharti AXA, for example, provides mileage coverage choices of 2500, 5000, and 7500 kilometers.
• The car insurer will then install a telematics device in your four-wheeler at no cost to you.
• The policies also include purchasing add-ons to increase your coverage.
• The usage tier determines the premium you pay for the car insurance and add-ons you select.
• The gadget records the distance traveled by the four-wheeler, the driver's driving habits, and the remaining kilometers in the account.
• You can contact the car insurer to reload the account when the money is depleted. According to the policies, this can be done at any time throughout or after the plan's duration.

2. Benefits of Pay As You Drive Car Insurance

        The following is how it works-

• To begin, the four-wheeler's usage for a one-year car insurance period must be stated (based on total kilometers driven). Car insurance companies have policies that provide various use slabs, which range from one insurer to the next. Bharti AXA, for example, provides mileage coverage choices of 2500, 5000, and 7500 kilometers.
• The car insurer will then install a telematics device in your four-wheeler at no cost to you.
• The car insurance policies also include purchasing add-ons to increase your coverage for your four-wheeler.
• The usage tier determines the premium you pay for the car insurance and add-ons you select.
• The gadget records the distance travelled by the four-wheeler, the driver's driving habits, and the remaining kilometers in the account.
• You can contact the car insurer to reload the account when the money is depleted. According to the policies, this can be done at any time throughout or after the plan's duration.
• Pay-as-you-drive insurance has a policy that also saves you money on your personal damage car insurance premiums. Depending on the car insurance, the savings might range from 5% to 25%.

3. Features of Pay As You Drive Car Insurance

Pay-as-you-drive auto insurance has a few significant features-

• The policy has a one-year term.
• The IRDAI has started a pilot initiative.
• Alternative to regular car insurance that is less expensive
• IRDAI determines the third-party premium.
• The four-wheeler's damage premium is determined by its usage (total kilometers driven).

4. Who Needs to Buy Pay as You Drive Insurance?

The ways in which people use four-wheelers, as well as their requirements and preferences, differ. That is why pay-as-you-go car insurance was created. This sort of car insurance policies is ideal for those who-

• Do not drive their four-wheeler frequently.
• Most of the time, you must take public transportation.
• They travel regularly and do not drive while doing so.
• You may own several four-wheelers, but you do not utilize them all at the same time.

5. Procedure to Buy Pay as You Drive Insurance

To get pay-as-you-drive car insurance policies online, follow these steps-

• Go to your preferred insurance provider's website and click on the "purchase car insurance" link.
• Choose between pay-as-you-drive and pay-as-you-go car insurance.
• Choose a used slab based on how much you use your four-wheeler (annual basis)
• Enter the four-wheeler's odometer information and KYC information such as name, phone number, and so on.
• Complete the permission form.
• If you want to, you may add-on covers.
• Your premium policies will be computed and presented based on the use slab you select. When you pay the fee online, your insurance will be provided in your name.

6. What Happens if the Car Usage Limit is Exhausted?

If the four-wheeler usage limit is reached, it can be refilled at any time before the policy expires or even during the policy term. If you haven't made any claims, switching to a greater use slab or basic own-damage car insurance is possible. It should be noted that the insured will be responsible for the increased premium. While according to the car insurance policy, your damage coverage must be renewed once it expires, your third-party coverage will continue active. Own damage claims cannot be submitted if the four-wheeler's distance travelled exceeds the use restriction.

Take Away

Before obtaining a pay-as-you-go car insurance policy, evaluate your financial situation, four-wheeler usage, insurance needs, add-on choices given by the car insurance provider, terms, features, and costs specified in the paperwork, just like you would with conventional car insurance. The claim process will go more easily if you read the materials attentively and consider your alternatives.

Also Read:

How to Raise A Car Insurance Claim for Own Damage Policy?

Tips to Keep Your Parked Car In The Best Condition

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.