The IRDAI piloted a project of letting select insurers offer “Pay as You Drive Insurance“, which does not depend on the period of insurance coverage, but on the number of kilometres you drive the car.
Who does it work for?
- Have a car but drive it infrequently (work from home, public transport, etc.?)
- Have multiple cars and some are used sparingly
- Have kept a car in a city, but mostly live elsewhere
The insurer adds a telematics machine in your car to measure the distance driven in a period, without any extra charge. If your pre-declared usage limit gets exhausted, you recharge for the balance.
The industry keeps evolving to serve its customers. The move from paper-based insurance to a digital platform is a prime example of this evolution. The regulating body as well as the insurers work towards serving potential and existing policyholders’ needs and making their insurance experience satisfactory. The Pay As You Drive Policy is a recent example that is directed towards offering a customized policy.
The Pay As You Drive (PAYD) or Pay As You Go model has been explored to a great extent in foreign countries but is new to India. This article will cover various aspects related to this model including its description, working, and benefits with the help of the following sections. A Key Takeaway section and a Frequently Asked Questions section at the article’s end will also help you to understand this new type of policy in India. Read ahead for a detailed explanation.