Pay As You Drive is a type of car insurance model. It allows the policyholders to customize their insurance policies to an extent, thereby helping to reduce the premium. Such policies already exist in developed nations across the world and are gaining momentum in India.
The Pay As You Drive car insurance policy offers the mandatory Third-party Liability Car Insurance Policy for the policy period. It also offers Comprehensive Coverage but is based on the distance travelled by the vehicle.
As a result, you pay the premium for the distance that you drive. Thus, if you drive less, you pay less for overall car insurance.
IRDA had proposed it in a Press Release in 2020 –
Pay As You Drive Car Insurance Policy:
1. Identify which insurers are offering this policy to buy the policy
2. While purchasing the plan, you will have to choose a ‘distance to be travelled’ slab. The premiums vary as per slabs for the distance to be covered by your vehicle. Some insurers also provide top-ups if you exceed the slab selected.
3. You might be asked to install a Telematics Device in your car by the insurer for tracking purposes.
Here are some of the add-ons in PAYD car insurance, subject to availability.
1. Zero Depreciation
2. Roadside Assistance
3. Engine Protection
4. No Claim Bonus
5. Return to Invoice etc.
It’s best to understand your driving usage, pattern, and need, and then pick a PAYD policy or a Comprehensive Policy to insure your car. The PAYD plan can be the right choice for you if you don’t use your car too often during the year or only use it to avoid public transport during the rainy season. If not, a normal policy may be a better choice.
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