While you may be a proud owner of a car, you may not necessarily drive it everyday. However, as per the law, you still would have insured it. You may definitely feel that the premium you are paying is costly in comparison to your insurance and car usage.
Irrespective of the same, you renew motor insurance on a timely basis to have an active insurance cover. But over the years, with the onset of technology, it looks like things are changing. Now you can buy pay as you drive motor insurance which charges you premium basis your driving and usage. Read on to know everything about pay as you drive motor insurance.
Pay as you drive insurance concept explained
Motor insurance has two components i.e. third party and comprehensive insurance. Third party premium is decided by the Insurance Regulatory Development Authority of India, whereas comprehensive cover premium is decided by the insurance company based on the coverage offered.
Pay as you drive insurance is a part of comprehensive policy under which the premium is charged based on your usage i.e. the estimated distance you plan to travel. Under pay as you drive insurance cover, there are three specified slabs-2500 km, 5000km and 7000km. You need to choose from these slabs and inform the insurance company about the same and based on the usage of the car, the premium will be calculated.
Type of coverage
This type of cover is considered to be more economical since you are charged based on the usage of the vehicle since you only pay for the distance you have traveled. Third party premium will be continued to be decided by the IRDA and will have no impact on premium for pay as you drive cover. For your own damage cover, if you drive less, you will end up paying less.
Premium collection and calculation
The premium for pay as you drive cover has to be paid upfront at the time of renewal. The premium calculation will be done based on the distance covered and not the time you spend in the car. Coverage will not be provided in case the vehicle exceeds the specified kilometers mentioned in the policy. Insurance companies do provide an option to add more kilometers if the usage is high. Few insurers may offer the facility to turn off or on the coverage based on the requirement.
To track the distance traveled, a telematics device will be installed in the car. The device will monitor the distance, besides also giving you information about the balance distance.
Pay as you drive insurance buying process
To purchase pay as you drive cover, you have to go through the standard KYC process, fill out the consent form at the time of purchase or renewal of your existing car insurance cover. This type of insurance cover can be availed through online aggregator, insurance website and aggregator distribution channels.
Why should you choose to purchase pay as you drive insurance?
Here are few reasons why you should purchase pay as you drive insurance cover:
- If you hardly use your car
- If you hardly travel long distance
- If you have more than one car
- If you use more than one car frequently