Motor insurance companies can now charge you a premium based on how you drive as the Insurance Regulator, IRDA has enabled insurance companies to introduce tech-enabled concepts that take into account the driving behavior of the vehicle owner.
As per the new rule, insurance companies can now charge you premium depending on ‘pay as you drive’, and ‘pay how you drive’ concept.
Your driving skills will now play a bigger role in determining the premium you have to pay towards your auto insurance policy. IRDA, in the last week, announced that the two new policies can be implemented with immediate effect.
Moreover, IRDA has also enabled insurance companies to offer floater policy for those having more than one vehicle which can be offered as an add-on based on the owner’s driving history.
IRDA’s move to introduce telematic-based motor insurance plans will make insurance more affordable and lead to an increase in penetration of vehicle insurance in the country.
Three new types of vehicle insurance covers explained
Pay as you drive
This will enable vehicle owners to pay for insurance cover based on their usage. The vehicle owner has to make a declaration of the planned usage based on which the same can be tracked through geo-tagging. Insurance companies will have to clarify the claim process in case the customer exceeds the declared usage.
Pay how you drive
This will be dependent on how you drive the car. Customers have an option to choose live-tracking of their driving in terms of speed, usage and other parameters. Insurance companies can decide on the premium based on these parameters.
Floater policy for possessing more than one vehicle
If the vehicle owner has more than one vehicle i.e. two wheeler or four wheeler then the add on will provide coverage for all the vehicles. In a notification IRDA said that the concept of motor insurance is constantly evolving.
Technology has created a relentless pace for the insurance fraternity to rise up to the interesting and challenging demands of the millenials. The general insurance sector needs to keep pace with and adapt to the changing needs of the policyholders.
The above new add-ons with existing own damage cover will offer more choices to the vehicle owners.
As per IRDA, bad or rash driving will attract a high premium and the driving pattern of the vehicle will be monitored through global positioning systems. A small device will be fitted in the vehicle or an application can track and share information of the vehicle owner’s driving details with the insurance company.
With technological assistance, a driving score will be generated which can help insurance companies determine the premium.