The usage-based motor insurance, popularly known as ‘Pay As You Drive’, allows customers to pay the premium depending on how many kilometers the car has traveled. In the first tranche of sanctions, the Insurance Regulatory and Development Authority of India (Irdai)
approved companies such as Bharti Axa General, Go Digit, TATA AIG, ICICI Lombard, etc.
approved companies such as Bharti Axa General, Go Digit, TATA AIG, ICICI Lombard, etc.
Under this insurance scheme, a customer pre-declares vehicle usage for a period of one year. Accordingly, the insurance premium will be calculated dynamically as per the pre-declared distance in km. The customer can choose from three slabs - 2500 km., 5000 km. and 7500 km – as per his/her usage need.
Mr. Sanjeev Srinivasan, Managing Director, and CEO of Bharti AXA General Insurance said that "apart from enjoying extra premium benefits as per the declared usage slab, the customer also has the option to move to a higher slab in the middle of the tenure or make a transition to standard motor own-damage cover, in case of driving beyond the pre-declared kilometers."
Where to buy?
Insurers are now offering the usage-based product through their company websites, online insurance aggregators like PolicyBazaar.com, agents and other distribution channels.
If you want to buy the policy online, then you just have to provide the odometer reading, Know Your Customer (KYC) details, and fill up a customer consumer consent form.
Should you buy?
‘Pay As You Drive’ is ideal for the customers who have multiple vehicles and may not use each vehicle as much; therefore, they may not have to pay a large premium amount.
Also, If you are someone who mostly relies on public transport or even use your vehicles rarely due to medical complications, then this will help you cut cost on your vehicle insurance.
Also, another thing to consider is that a "Pay As You Drive" product is comprehensive own damage (OD) plus third party (TP) policy and is being offered on a pilot basis for a year. Insurers are required to sell 10,000 policies in six months to be able to offer this as a regular insurance policy.
