IRDAI has allowed insurance companies to introduce modern facilities for vehicle insurance policies. The objective is to make motor insurance more affordable and increase its market reach. For those who do not use their car or vehicle regularly, this insurance is of great use.
Under the innovative insurance add-on cover, motor insurance premium will now have to be paid according to the mode of driving. The Insurance Regulatory and Development Authority of India (IRDAI) has allowed general insurance companies to offer advanced features of additional benefits and comprehensive protection cover for vehicle insurance policies. The objective is to make motor insurance more affordable and increase its market reach. Insurance companies have been allowed to launch Pay as You Drive, Pay How You Drive and Floater policies.
Many people buy vehicles for emergencies. They rarely use the car. At the same time, many people have a car, but their work is always done in other cities. There they have to use public transport or office cabs more. Pay as you drive insurance is a better option for those who use their vehicle infrequently. This allows them to save money on their auto insurance premiums.
What is its feature
The premium of the vehicle on this insurance depends on how many kilometers it has driven. The benefit of this insurance is available only to those vehicles which have driven less than 15 thousand kilometers. If you have more than one car, this plan can save you a lot of money on vehicle insurance. If your existing motor insurance policy is about to expire and now you want to take pay as you drive insurance, then you have to apply for it before the policy expires
Pay as you drive insurance is different from other policies in many ways. You will have to give a declaration that your vehicle has driven less than 15,000 kms per year at the time of taking the policy. To get the odometer reading, you need to upload a video of the car before the current insurance expires. Also, you will have to install a telematics device in your vehicle which will keep tracking the distance covered by your vehicle. If the vehicle has driven more than 15,000 kilometers while claiming the insurance amount, then the person taking the insurance for those extra kilometers will have to pay from his own pocket.
How the insurance will be decided
‘pay as you drive’ and ‘pay how you drive’ are vehicle insurance models. It allows policyholders to customize their insurance policy up to a limit. This helps in reducing the premium. ‘Pay as you drive’ is a comprehensive motor plan where the premium will depend on the use of the vehicle whereas ‘pay how you drive’ is the premium related to driving behaviour. The premium for motor insurance will also have to be paid less for driving safely and in a good manner. On the other hand, there will be a higher premium for breaking the rules or driving the vehicle wrongly. That is, the amount of premium will be decided on the mode of driving.
