Buying car insurance online feels expensive, especially if you hardly drive your car. It doesn't make sense to spend a substantial amount on insurance when you take your car out occasionally. But you are legally bound to have valid motor insurance.
Considering this dilemma, the Insurance Regulatory and Development Authority of India (IRDAI) approved a new type of insurance in 2020. It's called the Pay As You Drive or Pay As You Go Insurance. In this article, we will discuss everything you need to know about Pay As You Drive motor insurance.
What is Pay As You Drive Insurance?
Pay As You Drive(PAYD) insurance is a type of car insurance in which you can pay the premium based on how much you drive your vehicle. So, the less you drive, the less you have to pay. However, this policy is only valid for cars that cover under 10,000 kilometres in a year.
This type of insurance is perfect for:
A second car which you don't use often.
Collectible cars that you don't drive much.
People who prefer to use public transport over driving their car.
People who drive their cars only in the city and don't take it out for long distances.
Pay As You Drive insurance is not available with all insurance providers as it is a comparatively new policy. You can contact your insurance provider and ask for details.
How Does Pay As You Drive Motor Insurance Work?
It's a bit tricky to understand how this new policy actually works. So, let us break it down for you.
The insurance company provides you with three to four different kilometre slabs from which you can choose. Suppose a provider gives you four slabs -
Slab 1: 0 to 2,500 km/yr
Slab 2: 0 to 5,000 km/yr
Slab 3: 0 to 7,500 km/yr
Slab 4: 0 to 10,000 km/yr
You can select an appropriate slab based on how much your car covers in a year. Upon selecting the desired slab, you must provide your car's odometer reading. You need to click and upload pictures of your odometer to prove the distance travelled.
There's no need to install any tracking device or telematics for the reading. Providing pictures of your odometer at the start and end of the policy term is sufficient.
Claiming Pay As You Drive Insurance
You can claim your own damages when your car stays within the selected slab.
For example, you have selected a slab of up to 7,500 km/yr. If your car has travelled 6,200 km at the time of a claim, you can get complete benefits. However, if your car has travelled beyond 7,500 km, you must pay an additional co-payment to compensate for the coverage.
This additional payment is only applicable for claims. If you do not make any insurance claim and your car travels beyond 7,500 km in that particular year, you don't have to pay any additional charges.
Benefits of Pay-As-You-Go Car Insurance
Here are some of the prime benefits of taking out a Pay As You Drive insurance instead of a comprehensive car insurance online.
1. Cost Savings:As you are only paying a premium for the selected distance travelled by your car, you end up paying a lot less. This saves you a substantial amount as compared to a comprehensive plan. You can also invest the saved amount in buying add-on insurance.
2. Flexibility: You decide how much you want to run a car and how much the premium should be for it. In short, you get complete flexibility while choosing the right insurance plan for your vehicle.
3. Consistent Third-Party Car Insurance: You decide how much you want to run a car and how much the premium should be for it. In short, you get complete flexibility while choosing the right insurance plan for your vehicle.
Conclusion
In a gist, Pay As You Drive insurance is an excellent option for people who hardly drive their car. It's an ideal solution for keeping your car insured and not paying a hefty premium. You can use a car insurance calculator to determine how much premium you need to pay based on how much your car travels. By doing this, you can save a lot on your car insurance online.
FAQs
1. Can I buy Pay As You Drive Insurance from any insurance provider?
Currently, only a few insurance providers have the Pay As You Drive insurance option. So, you must check with the specific insurance company if they provide this policy.
2. Do I need to install a tracking device in my car?
No, as of now, you do not need to install any tracking device in your car for the PAYD insurance. The company asks for pictures of your odometer, which is sufficient for tracking the distance travelled.
3. What happens if I buy Pay As You Drive insurance and my car travels beyond 10,000 km in that year?
The Pay As You Drive insurance remains valid even if your vehicle surpasses the 10,000 km/yr limit. However, if you want to make any insurance claims, you must pay an additional co-payment
